Annex 2

Descriptions for Drafting Export Control Law of
the People's Republic of China(Draft)I. Necessity of legislation(I) Implementation of export control is an important means to effectively
maintain China's security and development benefit. In order to prevent the riskof spreading weapons of mass destruction, conventional weapons, as well asrelevant dual-use items and technology throughout the world, it is necessary toaccelerate the legislation of export control, fully exert the important role of theExport Control Law in such aspects as national security maintenance, antiterrorism and anti-violence, protection for important strategic rare resources, andfulfillment of international obligations, so that the national security anddevelopment benefit could be effectively protected.

(II) Legislation of export control is the active demand for proper control andcompletion of legal system. The existing export control regulations and rules in
China were issued a long time ago with low legal hierarchy, and such problems as
insufficient investigation and law enforcement permission in working practice, inaddition to some cases being impossible to be investigated, affect the authority ofexport control. Legislation of export control is desiderated to fill up the legal lacuna,complete the legal system, and boost the control.

(III) Legislation of export control is the fundamental guarantee to fulfill
international obligations and strengthen international cooperation. China is
the permanent member of the UN Security Council and also the contracting stateof such international agreements as Treaty on the Non-Proliferation of Nuclear
Weapons, Chemical Weapons Convention and Biological Weapons Convention.
Legislation is required to complete the fulfillment mechanism and build the imageof a responsible great power. Besides, connection of export control legislation withinternational rules shall be promoted with strengthening the international1cooperation.

II. Guiding Principle of Legislation(I) Obey the overall national security concept and insist on coordination ofsecurity maintenance and economic development.
Properly handle the relationship between the export control and the national
security maintenance, economic development guarantee, and protection oflegitimate interest of administrative counterpart.

(II) Persist in the problem orientation and enhance the pertinence.
Comprehensively sort the insufficiencies of the existing legal system and actuallegislation demand, complete the legal system of export control, and build the legal
system of China-specific export control.

(III) Insist on scientific and democratic legislation.
Follow the law of economic, social, and technical development, andcomprehensively ask for all-round opinions, use international and domestic mature
methods and advanced experience for reference, and fulfill the international
conventions and treaty obligations.

III. Design for Main System of Legislation Draft(I) Take the implementation of overall national security concept as the mainline.
The draft clearly defines the guiding ideology of implementing the overall national
security concept in such leading clauses as purpose of legislation and control
principles. "Maintenance of national security and development benefit" is regarded
as the purpose of legislation, and "compliance with the overall national security
concept and persistence in coordination of security maintenance and economic
development" are defined as the principles of export control.

(II) Build the scientific export control management system as the core.
Firstly, scientific and complete control list system has been stipulated. National2

department in charge of export control jointly with relevant departments study andformulate the macroscopic and uniform export control policy to guide the export
control, comprehensively evaluate such factors as national security, technicaldevelopment, international market supply, international obligations, and influenceon trading and industrial competitiveness according to the export control policy, as
well as formulate and adjust the export control list based on scientific research anddemonstration. In order to meet the timeliness of export control and fulfill theinternational obligations as resolutions of the Security Council, the draft specifies
the temporary control and embargo measures, supplements the control list systemand constitutes the complete control system. Formulation of export control policy,
formulation and adjustment of control list, and implementation of temporary control
and embargo shall be submitted to the State Council or the State Council andCentral Military Commission for approval.

Secondly, comprehensive and rigorous license management system has been
stipulated. In the entity, the qualification management is performed for theoperators that are engaged in the export of controlled items through such systems
as monopoly and filing; in the object, the license management is undertaken forthe controlled items through the control list system; in the end-use and end-user
aspect, the management on end-use and end-user of the controlled items has
been reinforced to build more rigorous license management system.

(III) Regard the enhancement of law enforcement supervision andpunishments as the guarantee.
Firstly, the draft grants necessary law enforcement permission for competentdepartments. For such problems as insufficient permission of competentdepartment regarding investigation and law enforcement existing in the working
practice of export control, the draft grants necessary law enforcement permission
and means for national department responsible for export control, such as sealing
up and detaining relevant involved items and enhances the degree forinvestigation and law enforcement of export control.

Secondly, the draft increases the varieties of unlawful acts against export control.
Legal liabilities have been stipulated for such illegal behaviors as export without3

licenses, avoidance behavior, and illegal intermediary behavior with theenhancement of punishment for illegal behaviors.

Thirdly, the draft enlarges the punishments for unlawful acts and enhances thedeterrent force for law enforcement of export control. For example, the draft has
specified the punishments like temporarily suspending or revoking the enterprises'monopoly qualification, and stipulated that the credit information of punishedexport operators will be included into the national credit information sharing
platform for publicity to the society. National department in charge of export control
may not accept the submitted application for export license within 3 years.

(IV) Deem the improvement of enterprises' awareness of law violation
prevention as the supplement.
Enterprises are the first defense line of export control. For the export operators toconveniently obey the Export Control Law and reduce the illegal risk, the draft has
set up the provisions about compliance facilitation of export operators throughmultiple clauses and focused on improving the enterprises' awareness of law
violation prevention.

Firstly, the consulting mechanism has been stipulated for export operators. Before
export, the export operators may consult the national department in charge ofexport control for the items to be exported belonging to controlled items or not; theexpert consultation mechanism has been established to provide the expert
authentication opinions for the definition of controlled items; and the export
operators may obtain the services relating to export control through participationin relevant chambers of commerce and associations.

Secondly, the license facilitation system has been stipulated for export operators.
The state encourages the enterprises to build the internal compliance mechanismof export control and may grant corresponding license convenience like generallicense.

Thirdly, the administrative guidance system has been stipulated for export
operators. National department in charge of export control will issue the industrial
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instructions and optimum operation guidance about export control, and lead theenterprises for standardized operation.

Fourthly, the measures for illegal risk prevention has been set up for export
operators. National department in charge of export control may take suchmeasures as issuance of warning letters and regulatory talks, and remind theexport operators to prevent the illegal risk.

(V) Pay attention to connection with international rules, and embody theforward-looking and openness of legislation.
Firstly, the application range of export control is expanded to "dual-use items,military products, nuclear products, and other state-related items like cargoes,technologies, and services".

Secondly, international established practice is adopted in the definition of dual-use
items, including the dual-use items relevant to conventional weapons.

Thirdly, such license management means as license exception and license
convenience with such provisions as inspection on end-users and end-use havebeen added.

(IV) Strengthen the international exchange and cooperation, and build theimage of responsible great power.
Firstly, strengthening the international exchange and cooperation has beenspecified. The draft specifies that the national department in charge of export
control shall enhance the international exchange and cooperation about export
control and actively join the formulation of international rules.

Secondly, fulfilling the international obligations and building the image ofresponsible great power have been specified. The draft regards the performanceof such international obligations as nonproliferation as one of purposes oflegislation and stipulates that relevant licensing procedures shall obey theinternational obligations undertaken by the People's Republic of China and thespecial licensing procedures regarding export control specified in external promise.
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