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BIS has taken compulsory measures against US companies investigating the export of drafting to China.Outlook and events

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On June 7, the Bureau of Industry and Security (“BIS”) of the Ministry of Commerce issued a temporary denial order (“TDO”) to suspend the export privileges of three US companies, Quicksilver Manufacturing and Inc. Rapid Cut, LLC; and US Prototype, Inc. export technical drawings and 3D graphics and computer-assisted drawing files of controlled items to China for 180 days.1 The TDO, which may be extended, blocks all three companies from participating in transactions related to goods, software, or technology exported from the United States that are subject to the Export Administration Regulations (“EAR”). As BIS pointed out, TDO “is one of the most important civil sanctions that BIS can issue, not only the right to export items subject to EAR from the United States, but also exports from the United States or re-exports of items. We also block the right to receive or participate in the EAR. “2

Forbidden acts

The first breach occurred in 2017, when an unidentified US company contracted Quicksilver to manufacture satellite components. Given China’s license denial policy, a US company has provided Quicksilver with “about 12 technical drawings and 3D graphics / computer-assisted drawing files” for items covered by the EAR.3 After that, Quicksilver provided the drawings to a Chinese entity for production. When an unnamed US company received satellite parts created using technical drawings, shipping labels and quote invoices indicated that the goods were delivered from China.Four

Rapid Cut, which shares location, ownership, and operations with Quicksilver, made a similar transaction in May 2021 and follows the technical drawings of the controlled rocket platform test equipment that was subject to the estimation of China’s license denial policy. Sent to the destination. China for manufacturing.

Quicksilver made a similar transaction in March 2020 and sent technical drawings and computer-aided design files for items on the US Military Supplies List (“USML”) for manufacturing to China.

According to a document investigated by BIS, US Prototype shared the same US mailbox address as Quicksilver and Rapid Cut and was included in the TDO because the president of US Prototype was involved in an illegal transaction.

After announcing the enforcement measures, Matthew Axelrod, Assistant Secretary of Export Execution, issued a brief statement: Sending customers’ drawings and blueprints to China could have saved them a few dollars, but at the cost of protecting US military technology. “Five A statement by Assistant Secretary of State Axelrod indicates that this type of behavior may increase further. This means that U.S. export control extends not only to the international movement of goods, but also to software, technology and, in some cases, re-exports and re-exports (including deemed re-exports). It helps to remind the companies involved. service. If the legal definition is met, the technical drawing is very likely to be the subject of the EAR or USML.

1 US Department of Commerce Orders to Temporarily Deny Export Privileges: Quicksilver Manufacturing, Inc., Rapid Cut LLC, US Prototype, Inc. (June 7, 2022), https: // index.php/documents / export-violations / export-violations-2022 / 1372-quicksilver-tdo-final-6-7-2022 / file (hereafter, Quicksilver et al.TDO).

2 press release, Temporary denial order issued for illegal export of satellites, rockets and defense technology to ChinaBureau of Industry and Security, US Department of Commerce (June 8, 2022), https: // -08-bis-press-release-quicksilver-rapid-cut-and-us-prototype-tdo / file (BIS press release).

3 Quiksilver and others TDL, 3-4.

Four Id.. 5 o’clock.

Five BIS press release.