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The U.S. Commerce Department’s Bureau of Industry and Security (BIS) will remove 33 parties from the Unverified List (UVL), 27 of which based in China with others located in Indonesia, Pakistan, Singapore,Turkey, and the United Arab Emirates, according to an announcement of BIS on Monday. BIS didn’t disclose detailed list yet as the removal will become effective upon publication in the Federal Register on Tuesday.

“The ability to verify the legitimacy and reliability of foreign parties receiving U.S. exports through the timely completion of end-use checks is a core principle of our export control system,” said Assistant Secretary for Export Enforcement Matthew S. Axelrod. “Our removal of 33 parties demonstrates the concrete benefit companies receive when they or a host government cooperates with BIS to complete a successful end-use check.”

The UVL is one of several lists administered and maintained by BIS, which can be used by the U.S. Commerce Department to restrict certain exports. But UVL is not a list that imposes as strict export restriction as the Entity List, as it does not fully ban transactions with the listed parties, but imposes certain restrictions and requirements on exports, re-exports, and transfers of EAR-regulated items such as hardware, materials, software and technology to UVL parties.

Entities listed in the Entity List are subject to license requirements for Export Administration Regulations (EAR) -controlled items typically with a presumption of denial. The Entity List’s license requirements are independent of, and in addition to, license requirements imposed elsewhere in the EAR and license exceptions are generally not available.

BIS could adds parties to the UVL if the US Government is unable to verify their bona fides, i.e., legitimacy and reliability) in an end-use check or end user of items subject to the EAR. And it will remove these parties if it was able to establish their bona fides through the successful completion of end-use checks.

Parties listed on the UVL are ineligible to receive items subject to the EAR through license exceptions. The UVL does not create a freestanding BIS license requirement, but licenses are required due to unavailable license exceptions. Therefore, parties can continue to do business with individuals on the UVL, but if items subject to the EAR are involved, they will need to take additional compliance steps designed to resolve BIS’s concerns about the fact that the entity remains unverified.

Transactions that do not require a license-EAR99 or No License Required- require an UVL statement from the listed party. The requirements of this statement include name, address, website and contact details of the UVL party, an agreement to comply with the EAR, an end-use declaration, and agreement to cooperate with BIS’s pre-license checks and post-shipment verifications. An Automated Export System (AES) filing is also required for exports to parties on the UVL.

BIS introduced a two-step policy last October to improve its ability to facilitate end-use checks. Under the new policy, the agency can add parties to the UVL 60 days after end-use checks are requested but host government inaction prevents their completion. In addition, after an additional 60 days of continued inaction by the foreign government, BIS will initiate the interagency regulatory process to move those parties from the UVL to the Entity List.

BIS said the new policy subsequently led directly to the scheduling of end-use checks in China. On December 16, 2022, 26 parties located in China were removed from the UVL after subsequent scheduling and successful completion of end-use checks. BIS believed the recent announcement is a further reflection of the policy’s success in getting end-use checks scheduled.

On February 7, 2022, BIS added 31 parties located in China to the UVL. China’s Ministry of Commerce (MOFCOM) then warned the United States’ move seriously damaged the international economic and trade order and free trade rules, and pose a serious threat to the global industrial and supply chains, and urged U.S. to rectify its wrong practices to get back to the right track of win-win cooperation.

A MOFCOM spokesperson issued another warning in June after the U.S. Commerce Department added 31 Chinese entities to its Entity List. China firmly opposes the U.S. decision to include certain Chinese entities on an export control list under the pretext of so-called military and human rights concerns, the spokesperson said, calling the move a typical act of economic coercion and unilateral bullying by the United States to generalize national security and abuse export controls without factual basis. China will take necessary measures to firmly safeguard the legitimate rights and interests of Chinese enterprises, the spokesperson said.

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