On November 2, 2021, China’s Ministry of Commerce (MOFCOM) published a notice of an update to China’s Catalog of Technologies the Import of Which is Prohibited or Restricted (the “Catalog”). This is the initially time the Catalog has been revised in 14 yrs, and the new Catalog is significantly shorter, as promised by MOFCOM in 2020 just after its revision of China’s Catalog of Systems the Export of Which is Prohibited or Limited.
The shortening of the Catalog is the consequence of adjustments to the guiding principles for determining what technologies must be prohibited or limited from staying imported, with the overarching goal to simplify the Catalog as considerably as probable. For example, out of date creation systems stipulated by China’s rules and laws are no more time prohibited from being imported, not due to the fact the country is now encouraging their importation but mainly because these types of systems have fallen into this sort of disuse that it is no lengthier essential to involve them in the Catalog. With regard to the technologies of which the import is restricted, the new Catalog eradicated many types of systems that may perhaps be deemed protectionist, these types of as technologies regarded as “necessary” to build or expedite the institution of specific domestic industries or to safeguard China’s global money standing and stability of payments, or technologies inconsistent with China’s industrial insurance policies.
INTRODUCTION TO CHINA’S Technological know-how IMPORT Regulations
Know-how import into China is ruled by China’s Engineering Import and Export Restrictions (TIER). The scope of technologies import regulated by TIER is very broad, and includes all functions of technological know-how transfer from outdoors China to within just China, irrespective of whether by way of trade, investment decision, or financial and technological cooperation. Particularly, TIER regulates inbound assignments of patents and patent applications, patent licenses, transfers of technological secrets and techniques, provision of technological products and services, and other kinds of inbound cross-border technology transfers. TIER categorizes engineering imports into 3 types: technologies that may possibly be “freely” imported (the “Totally free Systems”), systems the import of which is limited (the “Limited Technologies”), and systems the import of which is prohibited (the “Prohibited Technologies”). The Catalog, promulgated by MOFCOM, includes the lists of the Limited Technologies and the Prohibited Technologies. Below TIER, import of the Prohibited Systems is prohibited, import of the Restricted Technologies is subject to MOFCOM’s prior approval, and the regulatory necessity for the import of the Totally free Technologies is the just after-the-actuality registration of the suitable technology import agreement, which shall turn out to be powerful in accordance to its have conditions and not conditioned on the registration.
MOFCOM’s acceptance of import of the Limited Systems can be a two-move or just one-step approach just before MOFCOM, based on the timing of the execution of the know-how import agreement vs. the software of the technologies import license (the “Know-how Import License”). The software for acceptance of the import of a Restricted Know-how can be submitted to MOFCOM before or during the negotiation of the technologies import deal, or just after the know-how import contract is signed, in which case, a copy of the executed technologies import deal must be incorporated in the software resources.
Right after acquiring the software, MOFCOM will perform a evaluation of the Restricted Technologies together with other relevant governmental agencies, e.g., China Nationwide Mental House Administration, China’s Ministry of Science and Technology or Ministry of Agriculture and Rural Affairs, or the Nationwide Forestry and Grassland Administration, based on the mother nature of the Limited Technological know-how. If the application does not incorporate a duplicate of the executed engineering import contract, the critique by MOFCOM (or collectively with the other governmental companies, as the situation may possibly be) may choose up to 30 company days in advance of an approval or disapproval final decision can be designed. The acceptance is not the closing approval of the technological innovation import, but will be a Provisional License for Technological innovation Import (the “Provisional License”). The know-how import applicant could signal the technologies import contract soon after the issuance of the Provisional License. Just after the technology import deal is signed, the applicant will have to apply for the final Technological innovation Import License by submitting to MOFCOM a duplicate of the executed engineering import contract and related supporting documentation. MOFCOM will perform an authenticity overview of the technological innovation import contract, and will make a selection on no matter if to approve the engineering import in just 10 business times just after acquiring the needed documents. The approval selection will be in the form of a Know-how Import License.
If the original application to MOFCOM involves a copy of the executed technology import deal, MOFCOM may take up to 40 business enterprise times to evaluate the complete application deal (which include the authenticity critique of the know-how import contract) prior to choosing no matter if to grant the Know-how Import License or not.
It is well worth noting that, no matter of any effective date established forth in a technologies import deal, with respect to any Restricted Know-how, the agreement is successful only on the issuance of the Technological know-how Import License. In the celebration of any substance modification to a technological innovation import agreement after obtaining the Engineering Import License, the engineering importer is required less than TIER to apply for a new Technological innovation Import License. The termination of a technological know-how import agreement shall also be recorded with MOFCOM.
Growth OF THE SCOPE OF Specific Restricted Technologies
The clear simplification or shortening of the Catalog can quickly be misconstrued as a reduction of the scope of the Limited Systems throughout the board. As is often, having said that, the devil is in the specifics. The growth of the scope of certain Limited Technologies can be located in certain Existence Sciences technologies. For illustration, “agricultural genetically modified organism software technology” continues to be a Limited Engineering in the Catalog, but the scope has been expanded from the technologies them selves to merchandise of the application of the systems, specifically, genetically engineered plant seeds and seedlings, animal breeds, aquatic fries and microbial species modified by modern day biotechnology. This is a important growth and has considerably-reaching implications simply because the importation of GMOs are now controlled not only by products import rules but also by know-how import regulations as a variety of Limited Know-how topic to MOFCOM acceptance and requiring a Technology Import License.
Recently Included Restricted Systems
The new Catalog also consists of selected Restricted Systems that were being not in the previous Catalog. For case in point, “fruit and vegetable preservation technology,” exclusively, sterilization know-how for fruits and veggies working with carbendazim, has now grow to be a Restricted Technological innovation.
An significant addition to the Catalog as a Limited Technological innovation is “highly pathogenic microorganisms.” These incorporate those people pathogenic microorganisms that induce the diseases listed in the List of Quarantine Illnesses for the Animals Imported to the People’s Republic of China, promulgated jointly by the Ministry of Agriculture and Rural Affairs and China’s Typical Administration of Customs in 2020 (a total of 170 diseases), all those in the List of Pathogenic Microorganisms Transmitted from Person to Particular person as Groups I or II pathogenic microorganisms, promulgated by the then Ministry of Wellbeing in 2006 (a whole of 99 microorganisms), and the pathogenic microorganisms that are yet to be found or have been declared eradicated in China.
The only Limited Systems in the computer software and information and facts technological know-how companies business in the Catalog (deepfake know-how and data encryption technologies) are recently included to the Catalog. Naturally, they would not have been provided in the prior Catalog specified the timing of their introduction.
This post has delivered a large-amount summary of China’s technologies import laws and the most up-to-date Catalog. For current details on China’s engineering export laws, make sure you refer to the author’s report here.