US Issues More China Sanctions for Human Rights Abuses

The XPCC is a “paramilitary organization” that is “subordinate” to the Chinese Communist Party and has been involved in creating a surveillance and detention program in Xinjiang for Muslim minority groups, the Office of Foreign Assets Control said. The Commerce Department added the XPCC to its Entity List in October (see 1910070076).

Along with the sanctions, OFAC issued a new FAQ and a General License authorizing certain transactions with XPCC subsidiaries. General License No. 2 authorizes until Sept. 30 certain wind-down “transactions and activities” with entities having XPCC ownership of 50% or more. The license also covers transfers of debt, divestments and “facilitating, clearing, and settling transactions.”

The license also requires users to submit to OFAC a “comprehensive, detailed report” for each transaction within 10 business days of the license’s expiration. The report must include names and addresses of the parties involved in the transactions, “type and scope” of the activities conducted and dates of the transactions. In the FAQ, OFAC clarified that the license does “not authorize any transactions involving the XPCC itself” -- only certain transactions with “any entity in which the XPCC owns, directly or indirectly, a 50 percent or greater interest.” Companies should contact OFAC if they are unable to wind down transactions with XPCC subsidiaries before Sept. 30, the agency said.

In a statement, Secretary of State Mike Pompeo called the sanctions part of an “ongoing effort” to penalize China in an attempt to deter its human rights abuses in Xinjiang. “We call on all countries to join us in condemning the CCP,” Pompeo said. The U.S. imposed the sanctions a day after Pompeo said the U.S. was crafting more restrictions against China for human rights abuses, including sanctions and possible additions to the Entity List.

“I don't want to get in front of the final decisions,” Pompeo told the Senate Committee on Foreign Relations July 30, “but you can rest assured that there are further actions, including further actions with respect to human rights violations, that the Department of State and the Department of Treasury are working to complete.”

Several senators asked Pompeo to consider more sanctions against China to build on July designations of a Chinese security agency and four Chinese officials (see 2007090024) and the addition of 11 China-based entities to Commerce’s Entity List (see 2007200026). Pompeo said he would welcome more authorizations from Congress to impose restrictions on China, including to address Chinese attempts to infiltrate U.S. universities and steal or illegally export U.S. technology. “We need an expanded tool set to make sure that we get this right,” Pompeo said.

Pompeo also said he was surprised at statements about China made by the CEOs of Google, Apple and Amazon during a July 29 House hearing. The CEOs said they were not aware of Chinese attempts to steal technology from their companies.

“There's a long history, a decadeslong history of Chinese intellectual property theft,” Pompeo said. “The idea that anyone in the tech space could not know of what the Chinese Communist Party is attempting to steal and the cyberattacks they're making seems incredulous.”

During the hearing, Pompeo was also asked about Russia sanctions, saying the Trump administration would welcome more authorities to sanction companies and people involved in Russia’s Nord Stream 2 pipeline. The State Department recently authorized new sanctions against Russia’s pipeline projects (see 2007150021), but Pompeo told the committee the administration has the ability only to “delay this project significantly.”

“We need further tools, and we’re prepared to use those tools if you provide them to us,” Pompeo said. “We think Nord Stream 2 is dangerous. We’ll do everything we can to make sure that pipeline doesn't threaten Europe.”