On August 28, 2020, China’s Ministry of Commerce (MOFCOM) and Ministry of Science and Technology (MOST) jointly published a notice on the adjustment of China’s Catalog of Technologies the Export of Which is Prohibited or Restricted (the “Catalog”). This is the first time the Catalog has been revised in 12 years, and the first time dual-use technologies have been included in technology export control.
The amendment of the Catalog as related to certain high-tech industries has attracted much media attention, particularly to the restriction on the export of drone technologies, certain information-processing technologies for artificial intelligence interactive interface and individualized information push services based on data analysis, and technologies related to password security and information defense and countermeasures. This article, however, will focus on the revisions related to the Life Sciences industry, after a brief introduction to China’s technology export regulations.
Technology export from China is governed by China’s Technology Import and Export Regulations (TIER). The scope of technology export regulated by TIER is very broad, and includes all acts of technology transfer from within China to outside China, whether by way of trade, investment, or economic and technological cooperation. Specifically, TIER regulates outbound assignments of patents and patent applications, patent licenses, transfers of technological secrets, provision of technological services, and other forms of outbound cross-border technology transfers. TIER categorizes technology exports into three categories: technologies that may be “freely” exported (the “Free Technologies”), technologies the export of which is restricted (the “Restricted Technologies”), and technologies the export of which is prohibited (the “Prohibited Technologies”). The Catalog, jointly promulgated by MOFCOM and MOST, includes the lists of the Restricted Technologies and the Prohibited Technologies. Under TIER, export of the Prohibited Technologies is prohibited, export of the Restricted Technologies is subject to MOFCOM’s prior approval, and the regulatory requirement for the export of the Free Technologies is the after-the-fact registration of the relevant technology export contract, which shall become effective according to its own terms and not conditioned on the registration.
MOFCOM’s approval of export of the Restricted Technologies is generally a two-step process before provincial-level branches of MOFCOM (“Local Commerce”). After it receives an application for approval of the export of a Restricted Technology, Local Commerce will conduct a review of the Restricted Technology together with other applicable governmental agencies, e.g., the local branch of China Intellectual Property Administration, the local branch of MOST, the Ministry of Agriculture and Rural Affairs, or the National Forestry and Grassland Administration, depending on the nature of the Restricted Technology. Such review may take up to 30 business days before an approval or disapproval decision can be made. The approval is not the final approval of the technology export, but will be a Provisional License for Technology Export (the “Provisional License”). The technology export applicant may not engage in any substantive negotiation of the technology export or sign any technology export contract until after the issuance of the Provisional License. After the technology export contract is signed, the applicant must apply for the final Technology Export License by submitting to Local Commerce the Provisional License, a copy of the technology export contract, a list of the Restricted Technologies to be exported under the contract, and documents evidencing the legal status of the contracting parties. Local Commerce will conduct an authenticity review of the technology export contract, and will make a decision on whether to approve the technology export within 15 business days after receiving the required documents. The approval decision will be in the form of a Technology Export License. It is worth noting that, regardless of any effective date set forth in a technology export contract, with respect to any Restricted Technology, the contract is effective only upon the issuance of the Technology Export License.
As a result of the adjustment of the Catalog, the following Life Sciences-related technologies (categorized into different industries) have been deleted from the Catalog, meaning that their export is no longer prohibited or restricted but will only be subject to after-the-fact registration of the relevant technology export contract:
- Medicine manufacturing industry
- Caffeine manufacturing technology using chemical synthesis or semisynthesis
- Riboflavin (VB2) manufacturing techniques
- Chemical synthetic or semisynthetic drug manufacturing technology
- Biotechnology for the manufacturing of penicillin, streptomycin, cephalosporin C, or aureomycin
- Thrombin-like snake venom single-component preparation techniques
- Natural medicine manufacturing technology
- Preparation and processing technologies for functional polymer materials with biological activities
- Professional device manufacturing industry
- Enzyme-labeled monoclonal antibody preparation technology
The following Life Sciences-related technologies (categorized into different industries) have been added to the Catalog as Restricted Technologies, meaning that their export will be subject to the approval process described earlier in this article:
- Crop (including forage grass) seed resources and their propagation technology, particularly those on the Catalog for the Classification of Crop Seed Resources for Export
- Artificial propagation technology for agricultural wild plants, particularly those listed in the Catalog of Wild Plants Subject to Special State Protection and the Convention on International Trade in Endangered Species of Wild Fauna and Flora
- Genetic engineering (genes and vectors)
- Newly discovered plant male sterile genes, restoration genes and vectors
- Newly discovered disease- or pest-resistant genes and vectors
- Newly discovered stress-resistant genes and vectors
- Newly discovered quality genes and vectors
- Newly discovered yield-related genes and vectors
- Other newly discovered important genes and vectors
- Unique gene manipulation technology
- Medicine manufacturing industry
- All bacterial and viral strains that are obtained using genetic engineering and can be industrially produced, and their culturing technology (this has been an expansion from a limited number of strains specifically identified in the previous version of the Catalog)
- Inactivated vaccine for enterovirus 71 (EV71)
- Rotavirus oral live vaccine
- Viral strains for EV71 vaccine
- Viral strains for CA16 vaccine
- Core techniques and technology for pentavalent and hexavalent rotavirus vaccine production
- Polysaccharide-protein binding technology
- Medical diagnostic devices and equipment manufacturing technology (including domestically made next-generation gene analyzers and third-generation single-molecule sequencers)
When responding to questions from the press, MOFCOM suggested that the latest amendment to the Catalog was intended to simplify the Catalog. This intention was not clearly reflected in the revisions related to the Life Sciences industry, however. As summarized above, MOFCOM seems to have added an equal or greater number of technologies related to the Life Sciences industry to the Catalog compared to the number deleted. Some of the newly added Restricted Technologies, such as “newly discovered important [plant] genes and vectors,” “bacterial and viral strains obtained using genetic engineering and which can be industrially produced,” and “medical diagnostic devices and equipment manufacturing technology,” appear to have been very broadly defined. MOFCOM also announced that it will further simplify the Catalog in the near future, and whether there will be more deletions from than additions to the Catalog of Life Sciences-related technologies in the next round of amendment to the Catalog remains to be seen.
Corresponding to the export Catalog, China also has a Catalog of Technologies the Import of Which is Prohibited or Restricted. MOFCOM further announced that it will significantly simplify that catalog in the near future. For more information on China’s technology import regulations, please refer to the author’s article here.