On July 20, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) announced that 11 Chinese companies would be added to the “Entity List.”
The 11 Chinese companies include three textile companies: Changji Esquel Textile, Hotan Taida Clothing, and Nanjing Xinyi Cotton Textile Printing and Dyeing.
Changji Esquel Textile was founded in 2009 by Esquel Group. Esquel Group produces clothing for brands such as Ralph Lauren, Tommy Hilfiger and Hugo Boss. On April 24, 2020, Esquel Group issued an announcement: Esquel opposes the use of forced labor.
The “Entity List” is an export control regulation established by the United States to safeguard its national security interests. U.S. exporters may not assist companies on these lists to obtain any items subject to this regulation without obtaining a license.
The Entity List is a list used by the Bank to restrict the export, re-export and (domestic) transfer of items subject to the Export Administration Regulations (EAR) to persons (individuals) who reasonably believe involve or pose a significant risk , organizations, companies) that engage in activities contrary to U.S. national security or foreign policy interests. Additional license requirements apply to the export, re-export and (domestic) transfer of items subject to the EAR to a listed entity, and the availability of most license exceptions is limited.
To put it simply, the “Entity List” is a “blacklist”. Once included in this list, it will actually deprive relevant companies of trade opportunities in the United States.
As early as two months ago, on May 22, Huafu subsidiary Aksu Huafu Colored Textile Co., Ltd. was also included in the entity list by the U.S. Department of Commerce. In response to being included in the “Entity List” by the U.S. Department of Commerce, Huafu Fashion Co., Ltd. immediately issued an announcement on its official website.
In response to the decision of the U.S. Department of Commerce, Huafu Fashion stated that the company is one of the largest new yarn companies in the world, and its investment in Xinjiang is based on high-quality cotton, energy prices, industrial workers and other resources advantages, as well as future opportunities for the westward development of the Belt and Road Initiative.
“According to the U.S. Export Administration Regulations, any transactions (including export, re-export and even domestic transfer) of EAR controlled items between listed entities and U.S. exporters are subject to restrictions. Akzo Huafu Services In the domestic market, its raw materials, equipment and technology can avoid products originating from the United States, and being included in the entity list will not affect its daily operations. Since its establishment, Akzo Huafu has not only been a capable enterprise, but also a With the purpose of being a good enterprise, we faithfully fulfill our social responsibilities, abide by relevant laws and regulations, abide by the business code of conduct, and fully respect the rights of employees.” Huafu Fashion said.
In fact, in the past year or so, the United States has expanded the “entity list” many times. This newspaper also published an article on June 2, “Huafu Fashion Subsidiary was included in the Entity List by the United States. Experts recommend five aspects of crisis management.” Up to now, there are more than 100 companies, universities and scientific research institutions included in the Entity List by the U.S. Department of Commerce. Some experts have predicted that as the Sino-US trade war escalates, this list will get longer and longer. Bai Ming, deputy director of the International Market Research Department of the Institute of International Trade and Economic Cooperation of the Ministry of Commerce, said: “The U.S. ban not only targets Chinese companies, but also targets industries. Don’t think that the United States is only targeting giants like Huawei. It is also conspiring to round up those companies. Small and medium-sized enterprises that have the potential to become bigger and stronger will be attacked collectively.”
When advising companies included in the Entity List, lawyers once pointed out that U.S. companies are not allowed to conduct transactions with them in restricted areas, while entities outside the United States must conduct transactions with entities on the Entity List in restricted areas. During transactions, if the so-called “U.S. minimum content standards” are met, U.S. trade rules must also be followed, otherwise, U.S. suppliers will face the risk of “cutting off supply.” If an enterprise violates the provisions of the Export Administration Regulations, it may be punished by the U.S. government. Such penalties mainly include the issuance of warning notices, administrative fines (up to the statutory maximum penalty for illegal matters), and in serious cases, Involves criminal offenses.
In addition, even if a customer is included in the “Entity List” of the United States, as long as the transaction target is not within the restricted area, you can continue to cooperate with these customers and will not be affected by the entity list and export controls. </p
