Amendments to export restrictions and prohibitions
Gene editing, synthetic biology and technology exports
Advice for companies facing export restrictions or prohibitions

Comment


It is widely understood in the industry that future cross-border IP licensing-out deals relating to gene editing and synthetic biology technologies may be impacted by the recent proposed amendment to China's negative list for technology imports and exports.

Amendments to export restrictions and prohibitions

In 2020, the negative list was amended to restrict exports of AI-related technologies. By the end of 2022, the Ministry of Commerce (MOFCOM) and the Ministry of Science and Technology proposed to further amend the negative list to add new export restrictions, as set out in the following table.

Technologies facing export prohibitions

Technologies facing export restrictions

  • somatic cloning technology for humans, including:
    • nuclear extraction and removal technology;
    • nuclear transfer technology;
    • embryo transfer technology; and
    • cell activation of key enzymes; and
  • gene editing technology for humans, including:
    • zinc finger nucleases technology;
    • transcription activator-like effector nucleases technology and clustered regularly interspaced short palindromic repeats (CRISPR) technology;
    • specific nucleases;
    • homologous recombination technology;
    • point knockout technology;
    • gene introduction and fragment deletion technology; and
    • multi-site mutation technology.
  • CRISPR gene editing technology that applies in:
    • ethically controversial areas, including gene-edited embryonic cells, egg cells and sperm cells; or
    • research that may cause significant harmful consequences; and
  • synthetic biology techniques, including:
    • key technologies such as efficient DNA synthesis and assembly, directed evolution and cell factory creation; and
    • synthesis technology of amino acids, proteins, starches and other major chemicals; and
    • technologies that may cause significant harmful consequences.

Gene editing, synthetic biology and technology exports

Gene editing and synthetic biology are two important areas in the life science industry in which China and the United States have long been competing. After the unveiling of the China 14th Five-Year Plan for the Development of Bioeconomy in early 2022, President Biden issued the Executive Order on Advancing Biotechnology and Biomanufacturing Innovation for a Sustainable, Safe, and Secure American Bioeconomy in September 2022.

Under Chinese law, "technology export" refers to the activities of providing or transferring technologies abroad by means of trading, investment, technical services or collaboration. Technologies that fall within the above restrictions are not limited to patented technologies. Non-patented technologies, such as trade secrets and know-how, would also be subject to such export restrictions.

Advice for companies facing export restrictions or prohibitions

Companies should apply to MOFCOM or its local counterparts for a letter of intent to obtain a technology export licence before they negotiate or reach any agreements involving the export of a restricted technology. After they execute such agreements, companies should further obtain a technology export licence and then go through customs, foreign exchange and other formalities (if applicable). The agreement will become effective upon the issuance of the export licence.

Where technologies are facing export prohibitions, companies may have to suspend any relevant deals, evaluate their options and seek alternative solutions where appropriate.

Comment

If the amendment becomes effective as it is, it would have a substantial impact on cross-border deals (including IP licensing, collaboration deals and technical services) in relation to gene editing and synthetic biology technologies. The upside is that this restriction mainly focuses on research and development, and may not have an immediate impact on the commercialisation activities of the products derived from restricted technologies.

For further information on this topic please contact Tina Wu at Haiwen & Partners by telephone (+86 10 5089 2216) or email ([email protected]). The Haiwen & Partners website can be accessed at www.haiwen-law.com.