Protecting and Preserving a Free and Open South China Sea

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Text of a Letter to the Speaker of the House of Representatives and the President of the Senate

Dear Madam Speaker: (Dear Mr. President:)

Pursuant to the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.) (IEEPA), the National Emergencies Act (50 U.S.C. 1601 et seq.), and section 301 of title 3, United States Code, I hereby report that I have issued an Executive Order taking further steps to deal with the threat posed by the People’s Republic of China’s (PRC) increasing exploitation of United States capital to resource and to enable the development and modernization of its military, intelligence, and other security apparatuses which continue to allow the PRC to directly threaten the United States homeland and United States forces overseas, including by developing and deploying weapons of mass destruction, advanced conventional weapons, and malicious cyber-enabled actions against the United States and its people.

Through the national strategy of Military-Civil Fusion, the PRC increases the size of the country’s military-industrial complex by compelling civilian Chinese companies to support its military and intelligence activities.  Those companies, though remaining ostensibly private and civilian, directly support the PRC’s military, intelligence, and security apparatuses and aid in their development and modernization.  At the same time, they raise capital by selling securities to United States investors that trade on public exchanges both here and abroad, lobbying United States index providers and funds to include these securities in market offerings, and engaging in other acts to ensure access to United States capital.  In that way, the PRC exploits United States investors to finance the development and modernization of its military.

To deal with that threat, I signed Executive Order 13959 on November 12, 2020.  Executive Order 13959 prohibits certain purchases involving publicly traded securities, or any securities that are derivative of, or are designed to provide investment exposure to such securities, of any Communist Chinese military company.  Those companies are ones the Department of Defense has listed, or will list, pursuant to section 1237 of Public Law 105-261, as amended, or are identified as Communist Chinese military companies or their subsidiaries by the Secretary of the Treasury using similar criteria.

Today, I signed an Executive Order amending Executive Order 13959.  The amendments prohibit certain sales as well as purchases of publicly traded securities, or any securities that are derivative of, or are designed to provide investment exposure to such securities, of any Communist Chinese military company.  They also prohibit possession of such securities by United States persons 1 year after a company is determined to be a Communist Chinese military company.  And, finally, they allow the Secretary of Defense publicly to list whether a company is a Communist Chinese military company using the criteria in section 1237(b)(4)(B) of Public Law 105-261, as amended by section 1233 of Public Law 106-398 and section 1222 of Public Law 108‑375, regardless of whether the Secretary must report that determination under section 1237(b)(2).

I am enclosing a copy of the Executive Order I have issued.

Sincerely,

DONALD J. TRUMP

Protecting and Preserving a Free and Open South China Sea

The United States and all law-abiding nations share a deep interest in the preservation of a free and open South China Sea.  All nations, regardless of military and economic power, should be free to enjoy the rights and freedoms guaranteed to them under international law, as reflected in the 1982 Law of the Sea Convention, without fear of coercion.

Today, the United States is taking additional actions to defend these rights and freedoms.  Pursuant to Section 212(a)(3)(C) of the Immigration and Nationality Act, the Department of State is imposing visa restrictions on People’s Republic of China (PRC) individuals, including executives of state-owned enterprises and officials of the Chinese Communist Party and People’s Liberation Army (PLA) Navy, responsible for, or complicit in, either the large-scale reclamation, construction, or militarization of disputed outposts in the South China Sea, or the PRC’s use of coercion against Southeast Asian claimants to inhibit their access to offshore resources in the South China Sea.  Immediate family members may be subject to these visa restrictions as well.

In addition, the Department of Commerce has added China National Offshore Oil Corporation (CNOOC) Limited to the Entity List in light of its role in the PRC’s campaign of coercion against other claimants of an estimated $2.5 trillion in South China Sea oil and gas resources. The Chinese Communist Party has used CNOOC and other state enterprises as weapons to attempt to enforce Beijing’s unlawful “Nine Dashed Line.” CNOOC used its mammoth survey rig HD-981 off the Paracel islands in 2014 in an attempt to intimidate Vietnam. CNOOC’s then-chief executive touted that oil rig as “mobile national territory.”

Beijing continues to send fishing fleets and energy survey vessels, along with military escorts, to operate in waters claimed by Southeast Asian nations and to harass claimant state oil and gas development in areas where it has failed to put forth a coherent, lawful maritime claim.

In a unanimous decision on July 12, 2016, an Arbitral Tribunal constituted under the 1982 Law of the Sea Convention – to which the PRC is a state party – rejected the PRC’s South China Sea maritime claims as having no basis in international law.  Last July, the United States aligned our position on the PRC’s maritime claims in the South China Sea with key aspects of the Tribunal’s decision and affirmed once again that we reject the PRC’s unlawful maritime claims in the South China Sea.  We welcome the unprecedented number of countries that have formally protested these claims at the United Nations.

The United States stands with Southeast Asian claimant states seeking to defend their sovereign rights and interests, consistent with international law.  We will continue to act until we see Beijing cease its coercive behavior in the South China Sea.

Related>

DOD Releases List of Additional Companies, In Accordance with Section 1237 of FY99 NDAA

Today, the Department of Defense released the names of additional “Communist Chinese military companies” operating directly or indirectly in the United States in accordance with the statutory requirement of Section 1237 of the National Defense Authorization Act for Fiscal Year 1999, as amended.

The Department is determined to highlight and counter the People’s Republic of China’s (PRC) Military-Civil Fusion development strategy, which supports the modernization goals of the People’s Liberation Army (PLA) by ensuring its access to advanced technologies and expertise acquired and developed by even those PRC companies, universities, and research programs that appear to be civilian entities.

The Department released its initial list of companies to Congress in June 2020 and will continue to update the list with additional entities as appropriate.

For the latest list, click here.

For previous lists, click herehere and here.

Commerce Adds China National Offshore Oil Corporation to the Entity List and Skyrizon to the Military End-User List

Today,  the Bureau of Industry and Security (BIS) in the Department of Commerce (Commerce) added Chinese National Offshore Oil Corporation (CNOOC) to the Entity List and Chinese company Skyrizon to the Military End-User (MEU) List.  Both companies threaten U.S. national security, CNOOC by helping China intimidate neighbors in the South China Sea and Skyrizon for its capability to develop, produce, or maintain military items, such as military aircraft engines.

“China’s reckless and belligerent actions in the South China Sea and its aggressive push to acquire sensitive intellectual property and technology for its militarization efforts are a threat to U.S. national security and the security of the international community,” said Commerce Secretary Wilbur Ross.  “CNOOC acts as a bully for the People’s Liberation Army to intimidate China’s neighbors, and the Chinese military continues to benefit from government civil-military fusion policies for malign purposes.”

Despite protests from the United States and other countries, China has been rapidly building the artificial islands since 2013, enabling the Communist Chinese Party’s militarization of disputed outposts in the South China Sea to undermine the sovereign rights of U.S. partners in the region.  CNOOC has repeatedly harassed and threatened offshore oil and gas exploration and extraction in the South China Sea, with the goal of driving up the political risk for interested foreign partners, including Vietnam.

The Chinese government fuels its military development, in part, through aggressive policies that allow it to access and replicate sensitive technologies for its militarization efforts.

“Skyrizon—a Chinese state-owned company—and its push to acquire and indigenize foreign military technologies pose a significant threat to U.S. national security and foreign policy interests,” added Ross.  “This action serves to warn the export community of Skyrizon’s significant ties to the People’s Liberation Army.”

The Entity List is a tool utilized by BIS to restrict the export, re-export, and transfer (in-country) of items subject to the Export Administration Regulations (EAR) to persons (individuals, organizations, companies) reasonably believed to be involved, or to pose a significant risk of becoming involved, in activities contrary to the national security or foreign policy interests of the United States.  Additional license requirements apply to exports, re-exports, and transfers (in-country) of items subject to the EAR to listed entities, and the availability of most license exceptions is limited.

The MEU List informs exporters, re-exporters, and transferors that a license will be required to export, re-export, or transfer (in-country) designated items to listed entities. The U.S. Government has determined that these entities represent an unacceptable risk of use in or diversion to a ‘military end use’ or ‘military end user’ in China, Russia, or Venezuela.  Skyrizon is the first company added to the MEU since it was introduced in late 2020.

Source: U.S. Department of Commerce

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