Kay C. Georgi Regan K. Alberda David Hanke Marwa M. Hassoun May 15 2020 Commerce Department takes aim at China's military-civil fusion policy Arent Fox LLP | International Trade - USA Kay C. Georgi, Regan K. Alberda, David Hanke, Marwa M. Hassoun International Trade IntroductionBIS to remove licence exception CIVs from EARsAPR: BIS may make changes to restrict re-exportsMilitary end-use/user controls and reportingIntroductionIn recent years, the US government has grown increasingly concerned by China's official policy of military-civil fusion (MCF), and multiple national security agencies have sounded the alarm bell. The Defence Department referred to MCF in the 2018 National Defence Strategy, concluding that China and Russia have been "deliberately blurring the lines between civil and military goals".At the end of April 2020, the Commerce Department got into the game, taking significant steps to revise the Export Administration Regulations (EARs) to address MCF. Specifically, on 28 April 2020 the Bureau of Industry and Security (BIS) issued two final rules and one proposed rule. The two final rules will be effective 29 June 2020, and comments on the proposed rule are due by the same date.Details on each rule can be found below.BIS to remove licence exception CIVs from EARsThis rule eliminates licence exception civil end users (CIVs) that previously authorised certain exports to China, Russia and other countries for civil end use.(1)BIS may make changes to restrict re-exportsA second proposed rule would eliminate a provision of the licence exception additional permissive re-exports that currently authorises certain re-exports to China and other countries if local export authorisation requirements are met.(2)Military end-use/user controls and reportingThe third rule sets out the most significant changes to the EARs by expanding military end-use and end-user controls applicable to China, Russia and Venezuela.(3)For further information on this topic please contact Kay C Georgi, Regan K Alberda or David Hanke at Arent Fox LLP's Washington DC office by telephone (+1 202 857 6000) or email ([email protected], [email protected] or [email protected]). Alternatively, contact Marwa M Hassoun at Arent Fox LLP's Los Angeles office by telephone (+1 213 629 7400) or email ([email protected]). The Arent Fox LLP website can be accessed at www.arentfox.com.Endnotes(1) Further analysis is available here.(2) Further analysis is available here.(3) Further analysis is available here.