Overview of U.S. Export Controls and Sanctions Issues Relating to ...

is not possible to develop a reliable list of controlled products, software and technology. The
items identified above are simply intended to be illustrative, to identify some potential areas for
further review and inquiry prior to export. Any company will need to perform a thorough review
for export controls purposes of all products, software and technology proposed for transfer to
PRC entities, to ensure that it is aware of the export jurisdiction (i.e., the ITAR or the EAR),
classification (i.e., applicable ECCN, if any) and export license requirements of all items to be
exported.
If a license is required from the BIS, advance planning of at least six months or more is
advisable. All license applications must be submitted electronically and a company must be
registered with the BIS’s online application system in order to submit a license application.
Additionally, license applications involving the PRC tend to be considered more sensitive and
involve a longer review period by the U.S. government. In addition to a review by Department of
Commerce and Department of Defense personnel, it is not uncommon for license applications
involving the PRC to also be staffed to the Department of State for further review of potential
national security and foreign policy considerations. While it is not likely that the export of any
products, software or technology would trigger the application of the “China Rule” described
above, exporters would need to be prepared to show why the rule does not apply, as the U.S.
government will consider the rule as part of the review of the license application.
It is certainly possible that the development of EV technology could involve “publicly available”
information that is not subject to the EAR or its licensing controls. However, as mentioned
above, the publicly available designation is available in only limited situations. Moreover, by
making information “publicly available,” exporters lose all proprietary protections, which is why,
in most cases, exporters choose not to make information publicly available even if there is no
regulatory prohibition from doing so.
Finally, it is possible that as part of initial EV development, companies will want to make use of
U.S. government funding, which could include funding made available by the U.S. Army, the
Defense Advanced Research Projects Agency or other military entities. Companies should
review such arrangements extremely carefully, to ensure they are not subjecting their products
and technology to ITAR controls (which would, among other things, preclude the involvement of
the PRC and could severely restrict future sales opportunities).
2. Compliance Considerations in Dealing with a Party Ineligible to Receive Exports
As mentioned above, the U.S. restricts exports and re-exports to certain foreign and U.S.
entities for national security and foreign policy reasons. Individuals and entities can end up
being placed on the Denied Persons List, Unverified List, Entity List, Debarred List, or
Nonproliferation Sanctions List. There are PRC entities included on the Entity List, SDN List,
and Nonproliferation Sanctions List. These entities tend to be research organizations associated
with the Chinese government, technology companies, and scientists. As a result, any EV
developer or producer looking to engage in research and development activities involving the
PRC should be especially careful that it does not end up doing business with an ineligible party,
which will require screening all parties to the transaction against U.S. government lists of
ineligible parties. There is a particular risk when dealing with the PRC. Unlike European Union
countries or other strong U.S. allies who are part of various multilateral regimes, and often
impose similar export and re-export restrictions, the PRC does not recognize most export
restrictions imposed by the U.S. As a result, a violation of U.S. export regulations would occur if
a U.S. EV developer provided certain export controlled technology to a PRC company and the
PRC company, in turn, provided the information to a research institution included on the Entity
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