Xinhua reported on June 7 that the Standing Committee of China’s National People’s Congress will conduct its second reading of a proposed statute, “Law on Opposing Foreign Sanctions” ( 反外国制裁法草案), from June 7 to 10. According to a sina.com article, a report from the Standing Committee in March of 2021 preceded the drafting of the legislation. The report discussed “the urgent task” of “legislation in foreign-related fields, to: enrich the legal ‘toolbox’, and cope with challenges and prevent risks.” Proposed legislation would “focus on counter-sanctions, anti-interference, and anti-long arm jurisdiction, and promote the formation of a comprehensive foreign-related law and regulation system.” Early stage research looked at the blocking statutes of other foreign jurisdictions and also involved gathering opinions and experiences of different Chinese agencies. The Legal and Constitutional Committees of the NPC were thereafter put in charge of drafting the law.
The SCMP reports that NPC delegates have been told to keep the draft confidential. It is conceivable that the proposed statute may build upon the “unreliable entity list” of MofCom (September 2020), and MofCOM’s January 9, 2020 Rule , the Measures to Block the Improper Extraterritorial Application of Foreign Laws and Measures, (Docket Number 1)（中华人民共和国商务部令 二〇二一年 第1号）(the “Rule”). The Rule was drafted as a MofCOM ministerial measure, but is otherwise cloaked in language of representing the central government. One commentator has suggested that this new legislation was deemed necessary because the Rule is “difficult to implement, due to [its] low hierarchy in China’s legal pyramid. MOFCOM, as a ministerial level agency, also found it difficult to get all the stakeholders, including the centrally administered state-owned enterprises, on board with its decision to punish compliance with foreign sanctions.”
Existing laws, such as the National Security Law and the Foreign Investment Law already provide legislative bases for implementing sanctions and addressing long-arm jurisdiction. This new legislation contributes another important building block. The NPC Observer is also tracking progress on this legislation and expects a final round of legislative review this month.
This posting is part of a series on how China and its ministries are legislating to address IP and technology issues since the launching of the US-China trade war, all of which will be searchable using the phrase “Trade War Legislation.”