{"id":4456,"date":"2022-02-10T20:05:07","date_gmt":"2022-02-11T02:05:07","guid":{"rendered":"https:\/\/blogs.luc.edu\/compliance\/?p=4456"},"modified":"2022-02-10T20:05:07","modified_gmt":"2022-02-11T02:05:07","slug":"blacklisting-the-modern-diplomats-weapon-of-choice","status":"publish","type":"post","link":"https:\/\/blogs.luc.edu\/compliance\/?p=4456","title":{"rendered":"Blacklisting \u2013 the Modern Diplomat\u2019s Weapon of Choice"},"content":{"rendered":"

Jack McBreen<\/em><\/span><\/p>\n

Associate Editor<\/em><\/span><\/p>\n

Loyola University Chicago School of Law, JD 2023<\/em><\/span><\/p>\n

Throughout the end of 2021, the Biden administration intensified its crackdown<\/a> on civilian organizations believed to be supporting China\u2019s military. As a result, the U.S. Commerce and Treasury departments, acting pursuant to the president\u2019s June 3 Executive Order, recently unleashed a barrage of economic sanctions by effectively blacklisting more than forty Chinese companies, tech firms, and research institutes. Such far-reaching measures have ensnared prominent businesses across a variety of industries, including facial recognition specialists, artificial intelligence companies, and the world\u2019s largest producer of commercial drones, DJI Technology Co. Those targeted were added to either the Commerce Department\u2019s entity list, which blocks trade with U.S. exporters of software and other technologies, or to a Treasury list restricting access to American investment. Placement on the Treasury\u2019s list<\/a> can be especially damaging to an organization\u2019s financial stability because the agency\u2019s policies not only bar those sanctioned from transacting with domestic businesses but also prohibit American investors from taking stakes in companies on the list. Unsurprisingly, a spokesman for China\u2019s Foreign Ministry quickly denounced the sanctions as an \u201cunwarranted suppression\u201d of Chinese enterprises. Some of the listed companies themselves also publicly criticized<\/a> their presence on the blacklists, including the artificial-intelligence start-up SenseTime Group which called the accusations against it \u201cunfounded.\u201d U.S. officials, however, defended the decision \u2013 citing both national security threats and human rights violations as causes for the sanctions.<\/span><\/p>\n

The policy initiatives behind U.S. blacklisting<\/strong><\/span><\/p>\n

The Commerce Department announced last November that certain companies, including Hangzhou Zhongke Microelectronics Co Ltd, New H3C Semiconductor Technologies Co Ltd, Xi\u2019an Aerospace Huaxun Technology, and China\u2019s Academy of Military Medical Sciences, were specifically blacklisted for supporting the \u201cmodernization of the People\u2019s Liberation Army.\u201d In particular, the U.S. Government\u2019s national security concerns seem to focus on the Chinese military\u2019s potential interest in using tech companies to develop highly sophisticated, tech-based weaponry<\/a>, such as counter-stealth applications, unbreakable encryption, and even devices with purported brain-control capabilities. U.S. officials have also pointed to China\u2019s alleged mistreatment<\/a> of ethnic minority groups, including Tibetans and Muslim Uyghurs, as an additional reason for the government\u2019s increased use of blacklisting. Both the Treasury and Commerce Departments have indicated that China\u2019s advancements in biotechnology present a serious threat to the safety of Chinese ethnic and religious minorities because of their ability to increase the government\u2019s surveillance and tracking capabilities. Specifically, agency officials stated that several companies were added to the Treasury\u2019s blacklist because of their involvement in creating software that can translate the Uyghur language to enable authorities to scan an individual\u2019s device for illegal content. Tech firms charged with producing experimental software that can recognize and track members of specific minority groups were also targeted.<\/span><\/p>\n

Increased blacklisting will likely trigger harsh retaliatory measures.<\/strong><\/span><\/p>\n

Overall, the U.S. Government\u2019s use of blacklisting to carry out certain foreign policy initiatives represents one of the few similarities in the agendas of the current and former presidents. By issuing Executive Order 14032<\/a>, President Biden authorized the continuation of efforts opposing the militarizing of Chinese companies, which were introduced via Executive Order during the Trump administration. In some ways, EO 14032 has even built on its predecessor by expanding the blacklists\u2019 scope to not only include organizations operating in the materiel sector but also those involved in surveillance technology as well.<\/span><\/p>\n

The United States\u2019 increased reliance on diplomacy by way of trade sanctions does, however, carry with it the very real threat that China will retaliate with equally strict or even stricter trade regulations. In fact, such retaliatory measures<\/a> may already be underway, as reports in 2020 indicated that officials in Beijing were creating their own list of \u201cunreliable entities.\u201d This Chinese blacklist intends to target those believed to have \u201cseverely damaged the legitimate interests\u201d of Chinese companies through injurious actions, such as breaching contracts, failing to abide by market rules, and disrupting supply for noncommercial purposes. Additionally, such policies would apply to a broad array of countries, businesses, and people and may punish those listed with a variety of sanctions, including fines, trade bans, and restrictions on investment. Finally, although China has not publicly named any blacklisted entities yet, several major U.S. corporations could be in its crosshairs. These potential targets range from FedEx Corp., which was accused by the Chinese government of mis-routing shipments sent by the telecom giant, Huawei, as well as General Dynamics Corp. and Honeywell International Inc. for their involvement in a proposed U.S. arms deal with Taiwan. Ultimately, while the possibility and extent of China\u2019s retaliatory measures remains unknown, the specter of additional blacklists continues to loom over international trade. \u00a0\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Throughout the end of 2021, the Biden administration intensified its crackdown on civilian organizations believed to be supporting China\u2019s military. As a result, the U.S. Commerce and Treasury departments, acting pursuant to the president\u2019s June 3 Executive Order, recently unleashed a barrage of economic sanctions by effectively blacklisting more than forty Chinese companies, tech firms, and research institutes. Such far-reaching measures have ensnared prominent businesses across a variety of industries, including facial recognition specialists, artificial intelligence companies, and the world\u2019s largest producer of commercial drones, DJI Technology Co. Those targeted were added to either the Commerce Department\u2019s entity list, which blocks trade with U.S. exporters of software and other technologies, or to a Treasury list restricting access to American investment. Placement on the Treasury\u2019s list can be especially damaging to an organization\u2019s financial stability because the agency\u2019s policies not only bar those sanctioned from transacting with domestic businesses but also prohibit American investors from taking stakes in companies on the list. Unsurprisingly, a spokesman for China\u2019s Foreign Ministry quickly denounced the sanctions as an \u201cunwarranted suppression\u201d of Chinese enterprises. Some of the listed companies themselves also publicly criticized their presence on the blacklists, including the artificial-intelligence start-up SenseTime Group which called the accusations against it \u201cunfounded.\u201d U.S. officials, however, defended the decision \u2013 citing both national security threats and human rights violations as causes for the sanctions.<\/p>\n","protected":false},"author":91,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[1152,1690,1953,1992],"class_list":["post-4456","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag-international-affairs","tag-regulation","tag-technology","tag-trade"],"_links":{"self":[{"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/posts\/4456","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/users\/91"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=4456"}],"version-history":[{"count":0,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/posts\/4456\/revisions"}],"wp:attachment":[{"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=4456"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=4456"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=4456"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}