U.S. Commerce Blacklists Firms Supporting PRC Military Quantum Computing Apps

November 25, 2021

The Commerce Departmentís Bureau of Industry and Security (BIS) has issued a final rule adding twenty-seven foreign entities and individuals to the Entity List for engaging in activities that are contrary to the national security or foreign policy interests of the United States. The twenty-seven entities and individuals are located in the Peopleís Republic of China (PRC), Japan, Pakistan and Singapore. One entity based in Russia was added to the Military End-User (MEU) list.

U.S. Secretary of Commerce Gina M. Raimondo released the following statement: ďGlobal trade and commerce should support peace, prosperity, and good-paying jobs, not national security risks. Todayís actions will help prevent the diversion of U.S. technologies to the PRCís and Russiaís military advancement and activities of non-proliferation concern like Pakistanís unsafeguarded nuclear activities or ballistic missile program. The Department of Commerce is committed to effectively using export controls to protect our national security.Ē

Eight technology entities based in the PRC are being added to the list as part of the Department of Commerceís efforts to prevent U.S. emerging technologies from being used for the PRCís quantum computing efforts that support military applications, such as counter-stealth and counter-submarine applications, and the ability to break encryption or develop unbreakable encryption. These PRC-based technology entities support the military modernization of the Peopleís Liberation Army and/or acquire and attempt to acquire U.S. origin-items in support of military applications. Todayís action will also restrict exports to PRC producers of electronics that the support the Peopleís Liberation Armyís military modernization efforts.

Sixteen entities and individuals operating in PRC and Pakistan were added to the Entity List based on their contributions to Pakistanís unsafeguarded nuclear activities or ballistic missile program.

Three affiliates of Corad Technology Limited, a Chinese entity added to the Entity List in 2019, have been added due to their involvement in sales of technology from the United States and other Western nations to Iranís military and space programs, Democratic Peopleís Republic of Korea (North Korea) front companies, and PRC government and defense industry subordinate entities.

BIS has also added the Moscow Institute of Physics and Technology to the MEU List on the basis of its production of military products for a military end-user.

These actions were taken under the authority of the Export Control Reform Act of 2018 and its implementing regulations, the Export Administration Regulations (EAR).

The Entity List is a tool utilized by BIS to restrict the export, reexport, and in-country transfer of items subject to the EAR to persons (individuals, organizations, companies) reasonably believed to be involved, have been involved, or pose a significant risk of being or becoming involved, in activities contrary to the national security or foreign policy interests of the United States. For the entities added to the Entity List in this final rule, BIS imposes a license requirement that applies to all items subject to the EAR. In addition, no license exceptions are available for exports, reexports, or in-country transfers to the entities being added to the Entity List in this rule. BIS imposes a license review policy of a presumption of denial for these entities.

The MEU List serves to inform the public of certain parties in China, Russia, Venezuela and Burma that the U.S. government has determined to be military end users. Exports, reexports, and in-country transfers of items identified in Supplement No. 2 of Part 744 of the EAR to parties listed on the MEU List require a license.

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