6 November 2020
The Ministry of Commerce of the People’s Republic of China issued “Provisions on the Unreliable Entity List” (UEL), a Decree which has come into effect immediately1. While the concept of UEL was introduced on 31 May 2019 and is yet to be published, the issuance of the Decree suggests that remarkable progress has been made in terms of enforcement readiness.
The Decree is built on China’s Foreign Trade Law and National Security Law, which takes foreign trade relations and national security as their subjects. The legislative purpose is stated in Article 1 of the Decree, “for the purpose of safeguarding national sovereignty, security and development interests, maintaining fair and free international economic and trade order, protecting the legitimate rights and interests of enterprises, other organisations, and individuals of China.”
As analysed in a previous article2, the UEL is a quasisanction program that fills a gap in the instruments at China’s disposal. UEL will enable the establishment of a sovereign sanction regime by China.
The UEL – once implemented – will target two kinds of behaviors committed by foreign entities:
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Actions that harm China’s “national sovereignty, security or development interests.” This clause may be underpinned by the National Security Law;
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Behaviours that interrupt “normal transactions with an enterprise, other organisation, or individual of China or applying discriminatory measures against an enterprise, other organisation, or individual of China, which violates normal market transaction principles and causes serious damage to the legitimate rights and interests of the enterprise, other organisation, or individual of China.”
For further information, please contact:
Johnny Xie, Senior Director, FTI Consulting
johnny.xie@fticonsulting.com
