One-Third of Entity List Companies Have Affiliates Captured by BIS 50% Rule, Firm Says
Open-source intelligence software firm WireScreen said it has identified more than 20,000 Chinese entities that are subject to U.S. export restrictions as a result of the Bureau of Industry and Security's 50% rule, released last month (see 2510030041 and 2509290017).
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
Although WireScreen said there are about 1,300 China-related parties named on the actual Entity List, the firm has found thousands of additional Chinese subsidiaries or other entities indirectly and majority-owned by those Entity List parties. Under the BIS rule, those majority-owned subsidiaries and affiliates face the same export license requirements as the listed company that owns them.
Those unlisted companies include businesses in the defense, semiconductor, aerospace and dual-use technology sectors, as well as affiliates of organizations that were designated by BIS as Military End Users or that have military or intelligence ties. WireScreen said one-third of Entity List companies have at least one active subsidiary exceeding the 50% ownership threshold.
"The Affiliates Rule expansion increases the number of listed companies more than fifteenfold," it said, "significantly raising due diligence requirements for U.S. firms."