export-controls 13 February 2020

Japan tells China: re-export law a barrier to buying Chinese

China’s revised draft export control law would benefit from, amongst other things, a reconsideration of its proposed reexport law. So say the signatories to a letter from nine Japanese manufacturing and business associations, published on the website of industry-government interface, CISTEC.

The letter is a response to a call for public comment issued by China at the 15th meeting of the 13th National People’s Congress Standing Committee. It is the second such call. A first draft elicited comments in 2018.

In the letter, signatories ‘appreciate’ the incorporation of their 2018 suggestion that the stipulation for on-site verification of end-users and end-uses has been removed and replaced with an end-user ‘pledge’.

It also welcomes the deletion of criteria including ‘technological development’, ‘international development’ and ‘supply to international markets’ in the ‘formulation of controlled items and requirements for licensing,’ but it says that China should go further in ensuring that the criteria for control are ‘limited explicitly to security-based export controls.’

But it retains earlier concerns about the incorporation of deemed export and re-exportation controls: ‘Re-export controls from non-Chinese countries raise not only concerns related to practical application…but also regarding the implications for the Chinese economy, which also depends on strong participation in global value chains.’ A reexport requirement for Chinese imports would, it cautions, ‘create strong disincentives to the use of Chinese products which could lead to a change in suppliers.’

See: http://www.cistec.or.jp/english/export/china_law/200210-english.pdf