New guidance from China’s Ministry of Commerce sets forth a number of factors that companies exporting from China should consider when establishing their export control compliance programs. For more information on this guidance, or China export compliance issues, please contact Tiffany Chong via email.
In December 2020 China implemented a new law on controls for exports of (1) goods, technologies, services, and other items related to safeguarding national security and interests or fulfilling international obligations and (2) dual-use items, military goods, and nuclear products. This law also requires the government’s export control agencies to provide guidance to exporters on establishing internal programs designed to ensure compliance with these export controls.
This guidance was issued in April and sets forth the following basic elements that should be included in export compliance programs.
- Senior management should draft and sign a statement that explains the purpose of export controls, affirms the company’s commitment to export compliance, and states that under no circumstances will the company make any sale that violates or potentially violates China’s export laws and regulations.
- If feasible for its size, the company should form a compliance committee that oversees the export compliance program and is accountable to senior management.
- The company should conduct a risk assessment on its export items, technology, organization operations, customers, and third-party service providers and establish measures to minimize risks.
- A complete screening and approval should be done for each export transaction before a contract is signed and executed.
- Procedures for reporting, investigating, and correcting suspected noncompliance should be established and have the full support of senior management.
- The company should provide job-specific knowledge training based on the needs of each business unit and communicate export responsibilities to each employee periodically or as requested.
- Periodic internal or third-party audits should be conducted at the corporate or unit level to identify compliance deficiencies and potential areas of risk and make recommendations to address them.
- The company should identify a list of records required to be kept for at least five years.
- Key compliance points should be set forth in a manual that is updated regularly and easily accessible.
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