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US sanctions China's strategic sectors

Change of guidelines on export control for USA Directorate of Defense Trade Controls

On February 14, 2022, the Department of State's Directorate of Defense Trade Controls (DDTC), the organization within the U.S. Department of State responsible for enforcing the International Traffic in Arms Regulations released Revision 5.0 of its Guidelines for Preparing Agreements.

Agreements, according to the Code of Federal Regulations, are the first step for an approval for the provision of a defense service, transfer of manufacturing know-how or production rights, or establishment of a distribution point abroad. The approval is a prerequisite before the service may be furnished. To obtain it, a US person must submit a proposed agreement. These agreements do not enter into force until written approval from DDTC is released.

There are three types of agreements: Technical Assistance Agreements (TAAs), Manufacturing License Agreements (MLAs) and Warehouse and Distribution Agreements (WDAs). Activities that frequently require an agreement are: supporting direct commercial sales to Foreign Parties; providing overseas maintenance or training support; technical studies, evaluations, demonstrations or consultations with Foreign Parties; release of manufacturing data or rights; efforts to import technology from abroad; supporting a foreign military sales case (Beyond scope of LOA); supporting U.S. Government-sponsored foreign contracts.

DDTC also notes that while "the majority of the text remains unchanged," the revisions restructure the Guidelines in a more logical and orderly fashion, and that duplicative guidance has been removed or consolidated.n 16 February 2022, the US Department of the Treasury's Office of Foreign Assets Control (OFAC) published a final rule adding formal regulations to implement previously announced sanctions regarding Chinese Military-Industrial Complex companies.

Source: Directorate of Defense Trade Controls

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