China issues new rules in response to foreign sanctions on Chinese firms
Updated 20:32, 12-Jan-2021

China's Ministry of Commerce on Saturday published new rules that prohibit companies from complying with foreign laws banning transactions with Chinese firms.

The ministry said the order on "unjustified extraterritorial application of foreign legislation" takes effect immediately. 

The ministry published the "Rules on Counteracting Unjustified Extra-territorial Application of Foreign Legislation and Other Measures" on its website.

They apply to situations where the extraterritorial application of foreign legislation "unjustifiably" prohibits Chinese organizations from engaging in normal economic, trade, and related activities with a third nation or region.

In publishing the rules, the Chinese government is demonstrating its solemn stand against the improper extraterritorial application of foreign laws and measures while at the same time exercising its responsibility to maintain the international economic and trade order, commented Han Liyu, a law professor at the Renmin University of China.

"As the world suffers from the impact of the epidemic, leading to weak economic recovery, countries should work together to promote global economic and trade cooperation and development," Han said.

Meanwhile, he stressed that "blocking the improper extraterritorial application of foreign laws and measures is not unique to China," noting that the European Union (EU), and countries including Canada, Mexico, and Argentina have all formulated similar legislation.

In 2018, the EU amended a 1996 statute to protect the bloc's operators from the extraterritorial application of third-country laws.

China will establish a working mechanism composed of relevant departments to take charge of counteracting unjustified extraterritorial application of foreign legislation and other measures, the rules notice said.

Han said that the Chinese government will provide guidance and services to enterprises in response to improper extraterritorial application of foreign laws and measures, and companies suffering losses, for this reason, can seek judicial relief from the court.

One thing that needs to be pointed out, said Han, is that while the legal rights and interests of enterprises are protected, they must also "undertake certain obligations, such as reporting relevant situations in a timely manner and complying with prohibitions, or they will be punished accordingly."

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