2020.09.22 TANG, Weiyang (David)
The PRC Ministry of Commerce (“MOFCOM”) issued an order promulgating the “Provisions on the Unreliable Entity List” (the “Provisions”) on September 19, 2020, effective immediately. These implementing rules have been long awaited since the idea was first introduced more than a year ago on May 31, 2019.
The Unreliable Entity List (“UEL”) will create new and unique challenges and dilemmas for some multinational companies doing business with and in China. This will be particularly true when foreign companies have to comply with economic sanctions and export controls under foreign jurisdictions in their dealings with Chinese entities. The UEL is a powerful tool for the Chinese government and will have a profound impact on foreign trade and investment. It has the potential to even have some extra-territorial effect, as this UEL mechanism is designed to protect Chinese companies’ interests.
In this client briefing, we will provide an overview of the UEL mechanism and our preliminary views, as well as some practical recommendations for multinational companies in navigating the upcoming challenges when doing business in and with China.
Why This?
It’s all about Huawei, and MANY OTHERS.
This idea was first introduced on May 31, 2019 after Huawei on May 15, 2019 was placed on the Entity List, one of the many restricted party lists administered by the U.S. government, and was thus barred from obtaining certain items and technologies subject to U.S. export control regulations. Over the past decade, in the course of the trade war and now the technology war between the U.S. and China, several hundred Chinese entities have been put onto these restricted party lists, such as Specially Designated Nationals and Blocked Persons (“SDNs”), and they have been subject to economic sanctions and export control measures imposed by the U.S. government. As the U.S. government is stepping into more sensitive areas like Hong Kong, Xinjiang and the South China Sea, and have put some Chinese senior government officials and many large state-owned enterprises onto the list, sentiment in China has grown to the point where the government needs to take countermeasures against the U.S.
How effective could it be?
When the UEL idea was first rolled out, the international community appeared worried yet skeptical. The government said it will “take any necessary legal and administrative measures against the designated unreliable entities; and the public will be alerted to be cautious to do business with those entities”. No more specific measures were laid out and nothing happened for a few months. It was thought by some foreign media to be a ‘tiger without teeth’.
However, now it seems it’s time for a showing of the ‘teeth’. The Provisions set out a menu of measures the government can choose from, such as:
restricting or prohibiting the foreign entity from engaging in China-related import or export activities;
restricting or prohibiting the foreign entity from investing in China;
restricting or prohibiting the foreign entity’s relevant personnel or means of transportation from entering into China;
restricting or revoking the relevant personnel’s work permit, status of stay or residence in China;
imposing a fine of the corresponding amount according to the severity of the circumstances;
other necessary measures.
The Provisions state, upon the designation, that the authority may also make “an alert about the risks of conducting transactions with the said foreign entity”.
Be mindful that the phrase “other necessary measures” may be more severe than it sounds. It provides the authorities with wide discretion. Could it expand to mean anything related to China or anything within the jurisdiction of China?
For example asset freezing, a sanction measure on the U.S. government’s menu when entities are designated as an SDN. MOFCOM alone might not have the legal authorization to freeze assets but others do.
As the Provisions explain, the UEL mechanism is “a working mechanism composed of relevant central departments to take charge of the organization and implementation of the Unreliable Entity List System”. The relevant central departments are unspecified but would very likely include the Ministry of Finance and the People’s Bank of China (which is the central bank of China). The Provisions also state that “the measures provided …shall be implemented according to the law by the relevant departments in light of their respective duties and functions”. So it wouldn’t be surprising if the designated UEL is faced with other unspecified measures, or even “extra efforts” at a different level of authority.
As to the measure related to investment, the scope is not very clear. It is provided as “限制或者禁止其在中国境内投资” which is translated as “restricting or prohibiting the foreign entity from investing in China” in the English version provided by MOFCOM. Does “investing in China” mean new investments, or could it cover existing investments in China? It is a question first posed when the UEL idea was rolled out over a year ago. By one interpretation, taking together with the government’s efforts to attract foreign investment, it is more likely the phrase means a new investment rather an existing investment.
Another issue that is unclear is whether the measures would be applied to affiliated companies. Under the U.S. sanction, OFAC has a 50% rule under which subsidiaries that are directly or indirectly owned by an SDN is also a blocked entity. If a foreign entity is designated, would its affiliates/subsidiaries in other countries or even in China also be subject to such measures? Would a subsidiary in China be allowed to continue its business with the designated foreign owner? Would a new acquisition or investment by an existing FIE be deemed as an investment by the ultimate foreign owner? No clear answers for now. It is hoped that the government will add some clarity over time, or at least be more specific in their designation decisions.
What could trigger the UEL, and how far can it reach?
From the outset, the Provisions set forth that:
The State shall establish the Unreliable Entity List System, and adopt measures in response to the following actions taken by a foreign entity in international economic, trade and other relevant activities:
(1) endangering the national sovereignty, security or development interests of China;
(2) suspending normal transactions with an enterprise, other organization, or individual of China or applying discriminatory measures against an enterprise, other organization, or individual of China, which violates normal market transaction principles and causes serious damage to the legitimate rights and interests of the enterprise, other organization, or individual of China.
It is noteworthy that such actions are not limited to activities in China. So, the government is exerting long arm jurisdiction here.
Any activities that are viewed to be endangering the national sovereignty, national security or development interests of China could invoke the UEL designation. It could be interpreted widely. It is worth recalling that the Ministry of Foreign Affairs made several announcements in July 2019 and July 2020 that the government would impose sanctions over certain U.S. companies involved in arms sales to Taiwan. No specific measures were announced at that time. It now seems that the UEL designation could be one of the measures the government may opt to take, as such arms sales may well be viewed as endangering the national sovereignty of China.
If you are familiar with the International Economic Emergency Power Act (“IEEPA”) in the U.S., which grants the U.S. President wide authority to impose sanctions and trade control measures on a “deal with any unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States”, these UEL Provisions are very similar. It essentially provides legal authorization for the government to impose measures on anyone that acts contrary to the interests of China.
Putting aside the long arm jurisdiction and broad authorizations, the Provisions specifically address scenarios wherein foreign entities are suspending normal transactions or applying discriminatory measures against a [Chinese person], which violates normal market transaction principles and causes serious damage to the legitimate rights and interests of the [Chinese person].
It clearly relates to the Huawei situation and other Chinese persons (an entity or individual) who have been placed on the Entity List or the SDNs list by the U.S. government, and thus are subject to U.S. economic sanctions and export controls, or other restrictions (such as the U.S. CBP’s Withhold Release Order). They are essentially cut off from the supply chain, e.g. unable to obtain U.S. items (e.g. Huawei), not able to access the U.S. market (such as fabrics/clothing containing Xinjiang cotton), or even cannot deal with non-U.S. companies (with secondary sanction exposure) or in U.S. dollars (when they are designated as an SDN).
This UEL mechanism is designed to help protect the interests of Chinese companies in those situations. - It may sound similar to the “Blocking Statute” of the European Union, but in fact it is not the same kind of protection (see footnote1). It could be quite challenging for foreign counterparties in some situation.
In a case where someone is sanctioned by the U.S government (either under sanction programs or export controls), any items subject to the U.S. Export Administration Regulations (“EAR”) cannot be supplied to such a person without a license from the U.S. government. Otherwise, it is a violation of U.S. law. In the case of fabrics/clothing containing cotton from Xinjiang, the products could be subject to detention under a Withhold Release Order issued by U.S. Customs. For these reasons, foreign counterparties would have to comply with U.S. law when the items are subject to the EAR or are entering the U.S. market. Such compliance would require them to discontinue the supply or the purchase from a Chinese entity sanctioned by the U.S. government if no license can be obtained. With this UEL mechanism, complying with U.S. law in such a situation could possibly trigger a UEL designation. Once designated, foreign companies could be cut off from Chinese supply chains, meaning that sourcing from China or supplying into the Chinese market would be impossible. In this sense, this UEL mechanism may add concerns or uncertainties in the global supply chain restructuring. .
How to navigate the dilemma
Honestly we don’t know, unless one would be willing to circumvent U.S. laws.
In making the decision of UEL designation, the authority would look into factors including (i) the degree of danger to the national sovereignty, security or development interests of China; (ii) the degree of damage to the legitimate rights and interests of [Chinese persons]; (iii) whether being in compliance with internationally accepted economic and trade rules; and(iv) other factors that shall be considered.
If “suspending normal transactions” is a must-do under U.S. law, then the only possible argument is “being in compliance with internationally accepted economic and trade rules”. Arguments such as the fact that “designation” would do more harm to other Chinese interests (e.g. other Chinese companies still need American chips) could be helpful in negotiating with the government to impose as few restrictions as possible.
The third factor, “whether being in compliance with internationally accepted economic and trade rules” is vague. Unlike the previous factor “whether the actions of the entity are not for commercial purposes and are in violation of market principles and contractual obligations”, as explained by MOFCOM officials in May 2019 when the UEL concept was first introduced, although it is also vague, it at least easier to comprehend. In any event, being obliged to comply with U.S. laws is definitely not among the “internationally accepted economic and trade rules”.
So the burden is for the foreign entity to demonstrate if there is any cause existing under any “internationally accepted economic and trade rules” (such as WTO rules, UN Convention on Contracts of International Sales of Goods, INCOTERMs) that could serve as justifiable grounds to suspend the transaction. A few things may be worth considering:
Carefully examine the compliance requirements. Try not to over-comply.
Contract terms. Sanctions or trade control clauses are very common in contracts drafted by sophisticated multinational companies. One suggestion would be to think it through twice. Indicating that the items are subject to EAR and requesting representations and warranties with respect to the end user/end use and non-diversion would be unlikely to become an issue. It could be problematic to directly state the events, such as the buyer becomes an SDN or is placed on the Entity List by the U.S. government as a ground for terminating the contract. No-obligation to supply at discretion would be a good clause to have. Revisit the governing laws and the dispute resolution clauses for better protection in case of being sued for commercial losses.
Establish affirmative defenses. Building up a case of a breach of contract by the counterparty or citing some other cause (such as an inability to obtain a supply of materials) when deciding to terminate the contract. In addition, demonstrating efforts to seek licenses from the U.S. government could be helpful.
Consider a Plan B, especially for major deals. Both sides of the deal should carefully review the MAC (Material Adverse Change) or MAE (Material Adverse Effect), as well as exit plans, to accommodate this UEL situation.
Maintain a low profile when the business relationship is suspended. Developing a crisis management protocol is recommended.
What’s the designation procedure; what needs to be prepared for investigations?
It is applaudable that the Chinese government follows a better due process in the designation procedure, unlike the U.S. government which doesn’t provide any opportunity to argue.
The Provisions state that the authority will make an announcement when it opens an investigation. Under the U.S. sanctions and export control regimes, the investigation is not announced. One doesn't know until it is designated.
During the course of investigation, the foreign entity can present its arguments. The U.S. regimes do not offer that.
The Provisions further provide that the authority may suspend or terminate the investigation based on the actual circumstances, and resume when the facts warranting the suspension change materially. This seems to suggest that there might be an opportunity to negotiate and reach a settlement.
According to the Provisions, the authority can self-initiate the investigation process, or initiate the investigation “upon suggestions and reports from relevant parties”. So, be mindful that the counterparties may exploit this as leverage if the parties are in dispute.
During the course of the investigation, the authority can “inquire the relevant parties, consult or copy the relevant documents and materials, and take other necessary means”.
Note that an investigation is not always a must-do procedure before the designation. The Provisions also provide that, “[w]here the facts about the actions taken by the relevant foreign entity are clear, the working mechanism may, by taking into overall consideration the factors specified in Article 7 of these Provisions, directly make a decision on whether to include the relevant foreign entity in the Unreliable Entity List; if a decision is made to include in the Unreliable Entity List, an announcement shall be made.”
Some suggestions for multinational companies:
When an investigation is initiated, be cooperative and act proactively, so that your arguments can be heard.
Protocols for responding to investigations. Companies and their affiliates in China should develop and implement policies and procedures for properly responding to a government investigation or even just an inquiry.
Be prepared for an investigation. Companies and their affiliates should act quickly and be prepared once an investigation is announced. It’s recommended to conduct an internal investigation and review the relevant transaction records and correspondence with the Chinese counterpart, so as to develop a good defensible story.
Rules for internal and external communications and recordkeeping. Companies and their affiliates should exercise caution in communicating with counterparties, particularly during the contracting negotiation on sanction clauses and during the time of considering the suspension and termination of contracts. Also be careful in internal communications. Be mindful that affiliates in China could be requested to submit internal records, such as email correspondence with foreign parties.
What about Chinese counterparties?
The Provisions mandate that, “other units and individuals shall cooperate in the implementation”. This means it is a mandatory requirement that the counter-parties in China need to comply in their trading and investment dealings with foreign UEL entities.
According to the Provisions, “[w]here, under special circumstances, it is necessary indeed for a [Chinese person] to conduct transactions with the foreign entity that is restricted or prohibited from engaging in China-related import or export activities, an application shall be submitted to the Office of the working mechanism, then the transactions with the foreign entity in question may be conducted upon approval”. So, for trading with a UEL entity, prior approval is required and the approval is granted on a case-by-case basis.
Notably such approval is only for import and export activities and not for investment related activities. We are unsure if this is intentional and it is difficult to comprehend anyway. As the MOFCOM spokesman reiterated, this UEL mechanism does not in any way discourage foreign investment and it would make more sense if this case-by-case approval can be granted for investment related activities.
It is also noteworthy that there is no penalty clause for violations, either by foreign entities or by Chinese counterparties. In practice, for import and export activities, Customs can enforce such a trading ban at the border. Under customs regulations, such a violation would be smuggling.
Technically such a trading ban is susceptible to circumvention. But what if the Chinese counterparties have no knowledge that the products being imported or exported are going from or to the designated UEL? In a long global supply chain, it is not uncommon to sell to or buy from intermediary trading companies or distributors, without knowing the ultimate supplier or buyer. It would be more difficult for affiliated companies to demonstrate no knowledge.
How long can the designation last and what is the process for removal?
The Provisions do not specify how long the designation would last, rather it leaves it to the authority to decide in the designation.
Grace Period. The Provisions provide that “[w]here, the time limit for the relevant foreign entity to make rectifications is specified in the announcement of the inclusion of the said foreign entity in the Unreliable Entity List, the measures…shall not be implemented within the time limit. Where the relevant foreign entity fails to make rectifications within the time limit, the measures shall be implemented…”
According to the Provisions, there are several ways to seek removal.
Rectification. “[w]here the relevant foreign entity rectifies its actions within the time limit specified in the announcement and takes measures to eliminate the consequences of its actions, the working mechanism shall make a decision to remove it from the Unreliable Entity List”;
The authority can remove it on its own initiative;
The foreign designated entity can apply for removal, and the authority shall decide whether to remove it based on actual circumstances. There is no application procedure specified.
The Provisions do not provide the criteria for removal, and leaves it to the authority’s discretion “based on actual circumstances”. If the foreign entity is designated after an investigation is opened, probably the only way is to demonstrate that “the foreign entity has taken measures to eliminate the consequences of its actions”, or the actual circumstances do not warrant maintaining the entity on the UEL list.
Outlook
A few notes taken from the explanation by the Head of MOFCOM’s Department of Law and Treaty on the UEL mechanism at a press conference on September 20, 2020:
The UEL is not targeted to any specific country or enterprise.
The government would only designate those acting contrary to the interests of China pursuant to the Provisions and other laws, and the number of designations would be limited. The authority has no intent to freely exercise the designation.
There is no timeline to roll out the first UEL list, and there is no list of potential targets being considered.
We hope the above is helpful. For any questions, please kindly contact David Tang via email tangwy@junhe.com, or your daily contact at JunHe.
1.The EU Blocking Statute only relates to the application of U.S. sanctions concerning Cuba and Iran and have nothing to do with export controls. Further, protection by the EU is made by nullifying the effect in the EU of any foreign court ruling based on foreign laws, and by allowing EU operators to recover in court damages caused by the extra-territorial application of the specified foreign laws.
[Attachment: Provisions on the Unreliable Entity List]
中华人民共和国商务部令
二〇二〇年 第4号
Order of the Ministry of Commerce of the People’s Republic of China
2020 No. 4
《不可靠实体清单规定》已经国务院批准，现予公布，自公布之日起施行。
The Provisions on the Unreliable Entity List, approved by the State Council, are hereby promulgated and shall be effective as of the date of the promulgation.
部 长 钟 山
Minister of Commerce: Zhong Shan
2020年9月19日
September 19, 2020
不可靠实体清单规定
Provisions on the Unreliable Entity List
第一条 为了维护国家主权、安全、发展利益，维护公平、自由的国际经贸秩序，保护中国企业、其他组织或者个人的合法权益，根据《中华人民共和国对外贸易法》、《中华人民共和国国家安全法》等有关法律，制定本规定。
Article 1 These Provisions are formulated in accordance with the Foreign Trade Law of the People’s Republic of China, the National Security Law of the People’s Republic of China and other relevant laws, for the purpose of safeguarding national sovereignty, security and development interests, maintaining fair and free international economic and trade order, protecting the legitimate rights and interests of enterprises, other organizations, and individuals of China.
第二条 国家建立不可靠实体清单制度，对外国实体在国际经贸及相关活动中的下列行为采取相应措施：
（一）危害中国国家主权、安全、发展利益；
（二）违反正常的市场交易原则，中断与中国企业、其他组织或者个人的正常交易，或者对中国企业、其他组织或者个人采取歧视性措施，严重损害中国企业、其他组织或者个人合法权益。
本规定所称外国实体，包括外国企业、其他组织或者个人。
Article 2 The State shall establish the Unreliable Entity List System, and adopt measures in response to the following actions taken by a foreign entity in international economic, trade and other relevant activities:
(1) endangering national sovereignty, security or development interests of China;
(2) suspending normal transactions with an enterprise, other organization, or individual of China or applying discriminatory measures against an enterprise, other organization, or individual of China, which violates normal market transaction principles and causes serious damage to the legitimate rights and interests of the enterprise, other organization, or individual of China.
As used in these Provisions, the term “foreign entity” refers to an enterprise, other organization, or individual of a foreign country.
第三条 中国政府坚持独立自主的对外政策，坚持互相尊重主权、互不干涉内政和平等互利等国际关系基本准则，反对单边主义和保护主义，坚决维护国家核心利益，维护多边贸易体制，推动建设开放型世界经济。
Article 3 The Chinese Government pursues an independent foreign policy, adheres to the basic principles of international relations, including mutual respect for sovereignty, non-interference in each other’s internal affairs, and equality and mutual benefit, opposes unilateralism and protectionism, resolutely safeguards the core national interests, safeguards the multilateral trading system, and promotes an open world economy.
第四条 国家建立中央国家机关有关部门参加的工作机制（以下简称工作机制），负责不可靠实体清单制度的组织实施。工作机制办公室设在国务院商务主管部门。
Article 4 The State shall establish a working mechanism composed of relevant central departments (hereinafter referred to as “the working mechanism”) to take charge of organization and implementation of the Unreliable Entity List System. The Office of the working mechanism is located at the competent department of commerce of the State Council.
第五条 工作机制依职权或者根据有关方面的建议、举报，决定是否对有关外国实体的行为进行调查；决定进行调查的，予以公告。
Article 5 The working mechanism shall, in accordance with its duties and functions or upon suggestions and reports from the relevant parties, decide whether to investigate the actions taken by the relevant foreign entity; if it decides to investigate, an announcement shall be made.
第六条 工作机制对有关外国实体的行为进行调查，可以采取询问有关当事人、查阅或者复制相关文件、资料以及其他必要的方式。调查期间，有关外国实体可以陈述、申辩。
工作机制可以根据实际情况决定中止或者终止调查；中止调查决定所依据的事实发生重大变化的，可以恢复调查。
Article 6 When investigating the actions of a foreign entity, the working mechanism may inquire the relevant parties, consult or copy the relevant documents and materials, and take other necessary means. The foreign entity may state or defend its case during the investigation.
The working mechanism may, based on actual circumstances, decide to suspend or terminate the investigation. If the facts on which the decision to suspend the investigation is based have substantially changed, the investigation may be resumed.
第七条 工作机制根据调查结果，综合考虑以下因素，作出是否将有关外国实体列入不可靠实体清单的决定，并予以公告：
（一）对中国国家主权、安全、发展利益的危害程度；
（二）对中国企业、其他组织或者个人合法权益的损害程度；
（三）是否符合国际通行经贸规则；
（四）其他应当考虑的因素。
Article 7 The working mechanism shall, according to the results of the investigation and by taking into overall consideration the following factors, make a decision on whether to include the relevant foreign entity in the Unreliable Entity List, and make an announcement of the decision:
(1) the degree of danger to national sovereignty, security or development interests of China;
(2) the degree of damage to the legitimate rights and interests of enterprises, other organizations, or individuals of China;
(3) whether being in compliance with internationally accepted economic and trade rules;
(4) other factors that shall be considered.
第八条 有关外国实体的行为事实清楚的，工作机制可以直接综合考虑本规定第七条规定的因素，作出是否将其列入不可靠实体清单的决定；决定列入的，予以公告。
Article 8 Where the facts about the actions taken by the relevant foreign entity are clear, the working mechanism may, by taking into overall consideration the factors specified in Article 7 of these Provisions, directly make a decision on whether to include the relevant foreign entity in the Unreliable Entity List; if a decision is made to include in the Unreliable Entity List, an announcement shall be made.
第九条 将有关外国实体列入不可靠实体清单的公告中可以提示与该外国实体进行交易的风险，并可以根据实际情况，明确该外国实体改正其行为的期限。
Article 9 In the announcement in which the relevant foreign entity is included in the Unreliable Entity List, an alert about the risks of conducting transactions with the said foreign entity may be made. In addition, the time limit for the foreign entity to rectify its actions may also be specified based on actual circumstances.
第十条 对列入不可靠实体清单的外国实体，工作机制根据实际情况，可以决定采取下列一项或者多项措施（以下称处理措施），并予以公告：
（一）限制或者禁止其从事与中国有关的进出口活动；
（二）限制或者禁止其在中国境内投资；
（三）限制或者禁止其相关人员、交通运输工具等入境；
（四）限制或者取消其相关人员在中国境内工作许可、停留或者居留资格；
（五）根据情节轻重给予相应数额的罚款；
（六）其他必要的措施。
前款规定的处理措施，由有关部门按照职责分工依法实施，其他有关单位和个人应当配合实施。
Article 10 The working mechanism may, based on actual circumstances, decide to take one or several of the following measures (hereinafter referred to as “the measures”) with respect to the foreign entity which is included in the Unreliable Entity List, and make an announcement of the decision:
(1) restricting or prohibiting the foreign entity from engaging in China-related import or export activities;
(2) restricting or prohibiting the foreign entity from investing in China;
(3) restricting or prohibiting the foreign entity’s relevant personnel or means of transportation from entering into China;
(4) restricting or revoking the relevant personnel’s work permit, status of stay or residence in China;
(5) imposing a fine of the corresponding amount according to the severity of the circumstances;
(6) other necessary measures.
The measures provided for in the preceding paragraph shall be implemented according to law by the relevant departments in light of their respective duties and functions, and other units and individuals shall cooperate in the implementation.
第十一条 将有关外国实体列入不可靠实体清单的公告中明确有关外国实体改正期限的，在期限内不对其采取本规定第十条规定的处理措施；有关外国实体逾期不改正其行为的，依照本规定第十条的规定对其采取处理措施。
Article 11 Where, the time limit for the relevant foreign entity to make rectifications is specified in the announcement of the inclusion of the said foreign entity in the Unreliable Entity List, the measures provided for in Article 10 of these Provisions shall not be implemented within the time limit. Where the relevant foreign entity fails to make rectifications within the time limit, the measures shall be implemented according to Article 10 of these Provisions.
第十二条 有关外国实体被限制或者禁止从事与中国有关的进出口活动，中国企业、其他组织或者个人在特殊情况下确需与该外国实体进行交易的，应当向工作机制办公室提出申请，经同意可以与该外国实体进行相应的交易。
Article 12 Where, under special circumstances, it is necessary indeed for an enterprise, other organization, or individual of China to conduct transactions with the foreign entity that is restricted or prohibited from engaging in China-related import or export activities, an application shall be submitted to the Office of the working mechanism, then the transactions with the foreign entity in question may be conducted upon approval.
第十三条 工作机制根据实际情况，可以决定将有关外国实体移出不可靠实体清单；有关外国实体在公告明确的改正期限内改正其行为并采取措施消除行为后果的，工作机制应当作出决定，将其移出不可靠实体清单。
有关外国实体可以申请将其移出不可靠实体清单，工作机制根据实际情况决定是否将其移出。
将有关外国实体移出不可靠实体清单的决定应当公告；自公告发布之日起，依照本规定第十条规定采取的处理措施停止实施。
Article 13 The working mechanism may, based on actual circumstances, decide to remove the foreign entity from the Unreliable Entity List. Where the relevant foreign entity rectifies its actions within the time limit specified in the announcement and takes measures to eliminate the consequences of its actions, the working mechanism shall make a decision to remove it from the Unreliable Entity List.
A foreign entity may apply for its removal from the Unreliable Entity List, the working mechanism shall decide whether to remove it based on actual circumstances.
The decision to remove the foreign entity from the Unreliable Entity List shall be announced. Implementation of the measures taken according to Article 10 of these Provisions shall be ceased as of the date of the promulgation of the announcement.
第十四条 本规定自公布之日起施行。
Article 14 These Provisions shall be effective as of the date of the promulgation.
(English version is provided by MOFCOM for reference only.)
