News: United States issues new Executive Order targeting certain Chinese companies

On 3 June 2021, President Biden issued a new Executive Order (EO) imposing sanctions 'Addressing the Threat from Securities Investments that Finance Certain Companies of the People’s Republic of China.' The targeted companies will be identified by the United States’ Office of Foreign Assets Control on the 'Non-SDN Chinese Military-Industrial Complex Companies List' [the NS-CMIC List]. Broadly speaking, the United States authorities have determined that these companies, among other criteria, operate in the defence and related material sector or the surveillance technology sector of the Chinese economy.

The new EO prohibits specified purchases or sales by US persons of publicly traded securities of entities on the NS-CMIC List. OFAC has explained in a FAQ that the EO does not prohibit activity with entities on the NS-CMIC List that is unrelated to such securities, such as the purchase or sale of goods or services. The FAQs also explain that the EO does not prohibit the purchase or sale of goods or services with respect to subsidiaries of such entities. A copy of OFAC’s announcement along with the EO and accompanying FAQs can be accessed on the US Department of the Treasury website.

The new EO should have limited effect on non-US persons and international shipping. The issuance of the EO, however, confirms that the Biden Administration will continue to utilize economic sanctions in aid of its foreign policy. To assist members, the club can provide general guidance on sanctions-related inquiries and can assist in recommending expert sanctions lawyers if needed.

Category: Sanctions