Chinese companies that are already under US sanctions would be making a mistake to assume that they have ‘nothing to lose’ by flouting the sanctions against Russia. So said US Deputy Assistant Secretary for Export Administration, Matthew Borman at a 29 March briefing convened for the benefit of press in the Asia Pacific region.
Asked as to ‘what kind of punishment’ Chinese companies might face, Borman said, ‘There’s two things that could flow from that. One would be actions against any other parties that are facilitating that Chinese or other company’s failure to comply with the Russia restrictions. And secondly, the entity list at the end of the day imposes a license requirement, and a requirement to seek authorization. We could also then move to take actual enforcement action against any party that is in violation, and if found liable or guilty of a violation, then it is an even more severe consequence which could result in fines or even jail time if the party can be found subject to U.S. jurisdiction. But if not, [there would essentially be] a complete ban on any kind of transactions.’
Borman also said that the US government was conducting ‘industry outreach’ for Chinese companies, and had explained ‘the scope of controls’ to representatives of the Chinese Ministry of Commerce.
‘As far as U.S. companies or, frankly, any companies in China or elsewhere [are concerned], the requirements are that they make sure that they understand whether items they seek to export to Russia from China directly, or even indirectly, are subject to our jurisdiction. And so what they have to do is two analyses: one, if they have more than a de minimis amount of U.S. content in their items – and de minimis means more than 25 percent of the value of the overall product – and it’s going to Russia, then it’s likely caught by our restrictions and would need a license; and also, if the foreign-made product – even without that U.S. content – is based on U.S. software or technology or produced on a line that uses a U.S. tool or piece of equipment, then that direct product going to Russia may also be subject to these restrictions,’ he said.
