US Imposes Proliferation Sanctions on Chinese Entity
June 2001
In the June 26, 2001 Federal Register the Office of Chemical, Biological and Missiles Proliferation in the State Department imposed sanctions on a PRC entity pursuant to the Iran Non-Proliferation Act of 2000. The PRC entity is Jiangsu Yongli Chemicals and Technology Import and Export Corporation (China) (”JYCTIEC”), including any of its successors, sub-units or subsidiaries. The Federal Register notice did not describe specifically what the Chinese entity did. Apparently, the sanctions are in response to JYCTIEC transferring dual-use chemicals and chemical processing equipment to Iran.
The US sanctions specifically prohibit:
- US Government contracts with JYCTIEC;
- US Government assistance to JYCTIEC;
- No sales of items on the US Munitions List to JYCTIEC; and
- No new licenses approved for items on the Commerce Control List to JYCTIEC.
Exporters and reexporters, however, should consider whether this State Department announcement has implications beyond the scope of the actual sanctions. Specifically, does this announcement mean that exporters and reexporters should exercise additional caution when dealing with JYCTIEC-do exporters and reexporters now “have reason to know” that JYCTIEC will illegally divert US items? Is JYCTIEC a “Red Flag” of illegal diversion risk or proliferation activities?
The US Government has not released any information that JYCTIEC has illegally reexported items subject to US jurisdiction to Iran, or anywhere else. Nor has the US Government released any specific information that JYCTIEC is engaged in chemical/biological weapons or missile activities. And the fact that JYCTIEC apparently is doing business with Iran does not necessarily make it any more problematic than dealing with the multitude of European companies who do business with Iran.
Nonetheless, the US Government sanctions probably would prompt prudent exporters and reexporters to exercise an extra level of care when dealing with JYCTIEC. Maybe JYCTIEC is not a bright “Red Flag” of a high risk transaction, but it is hard to argue that it is not at least a slightly “Pink Flag.” When you are dealing with JYCTIEC you might want to ask for an additional level of information or gather additional documents to demonstrate and verify that the transaction does not involve any illegal activities or transfers.
Defense Trade Controls announced that it will continue its policy to deny all applications for licenses and other approvals for Afghanistan and to preclude the use of exemptions for Afghanistan. The DTC official announcement that it will continue to do what it has been doing is an official affirmation that the United States has implemented the provisions of United Nationals Security Council Resolution 1333 (December 19, 2000) which imposed a comprehensive arms embargo on Afghanistan.
