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At the recent Kickstart Europe Congress, influential leaders and experts converged to discuss the ever-evolving digital infrastructure landscape.
Global | Publication | June 2021
Article 3 of the ASL provides that if a foreign country, in violation of international law and basic norms of international relations, contains or suppresses China, takes discriminatory or restrictive measures against Chinese citizens or organisations or interferes in China’s internal affairs, by using pretexts or in accordance with its own laws (the Discriminatory Measures), China has the right to take corresponding countermeasures.
The ASL further provides that the authorized department of the State Council (Authorized Regulator) may decide to put individuals (Individuals Concerned) and organizations (Organisations Concerned) directly or indirectly involved in the formulation, decision-making, and implementation of Discriminatory Measures on China’s counter-control list. The Authorized Regulator may also decide to take countermeasures against the following individuals or organizations (Related Individuals and Organizations):
The countermeasures which the Authorized Regulator may take may include one or more of the following:
According to the ASL, decisions made by the Authorized Regulator on the matters outlined above will be final.
The Authorized Regulator may suspend, modify or cancel any countermeasures if the circumstances, on the basis of which the countermeasures were taken, have changed. Decisions of the Authorized Regulator and the State Council on the confirmation, suspension, modification and cancellation of the counter-control list and/or countermeasures will be announced to the public.
China will set up an anti-foreign sanctions working mechanism to be responsible for coordinating the relevant work. The relevant departments of the State Council will increase coordination and information sharing to decide on and implement countermeasures in the light of their respective responsibilities.
The ASL is not just about empowering the Authorized Regulator to take action against Discriminatory Measures; it may also have a significant impact on business activities in the commercial sector:
The provisions mentioned above will be particularly concerning to multi-national companies (MNCs) with operations in China for the following reasons:
Due to the potentially significant negative impact on business activities in the commercial sector, and on China’s efforts in attracting and retaining foreign investments, the Authorized Regulator may conceivably take a very conservative approach in implementing the ASL in practice. Notwithstanding this, MNCs should be mindful of the potential risks under the ASL and make careful and informed business decisions amid the increasingly complicated sanctions regimes around the globe.
To recap, on September 19, 2020, the Ministry of Commerce of China (MOFCOM) issued the Measures on Unreliable Entities List, pursuant to which a foreign entity may be put on China’s “unreliable entity list” if its acts endanger the sovereignty, safety and development interests of China or if it discontinues normal transactions with Chinese parties in breach of normal market trading principles. On January 9, 2021, MOFCOM issued the Rules on Counteracting Unjustified Extraterritorial Application of Foreign Legislation and Other Measures (referred to as China’s blocking measures), pursuant to which a working mechanism led by MOFCOM may issue an order to prohibit the application of foreign sanctions measures if such application is regarded as unjustifiable. The ASL has clearly kicked off a new era in China’s counter foreign sanctions regime, given that it stands at the top end of China’s legislative hierarchy and grants more extensive powers to law enforcement agencies to protect the interests of Chinese citizens and organizations.
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At the recent Kickstart Europe Congress, influential leaders and experts converged to discuss the ever-evolving digital infrastructure landscape.
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