Self-defensive Means of Chinese Entities in the Trade War Chaos

作者丨Ruth Guan

* 本文为威科先行独家内容，未经授权请勿转载

Self-defensive Legal Approaches of Chinese Entities in the Trade War Chaos

--Based On the Representative Case Of YMTC vs. U.S. DOC & BIS

As one of the leading semiconductor integrated device manufacturers in the field of flash memory chips in China, YMTC was added to BIS’s Unverified List in October 2022, the same time when BIS announced the new “60+60 days” End-Use Check policy[3]. Ironically yet profoundly, YMTC was added to Entity List in December 2022[4], along with its Japanese subsidiary Yangtze Memory Technologies (Japan), Inc.,“for reasons not related to the prevention of an end-use check”, as cited from the published document. Such use of words implied that YMTC might have shown strong willingness or even taken practical action to cooperate with End-Use Checks from BIS, but things did not run as planned. The Bureau still added YMTC to Entity List for “posing a significant risk of becoming involved in activities contrary to the national security or foreign policy interests of the United States”, as cited. 

An even more intriguing fact is that the authority which made such decision of adding YMTC and its Japanese subsidiary into Entity List was, unlike the rest additions which were decided by the End-User Review Committee(ERC)[5], only some sort of “agencies represented on the ERC”, which is, according to the Statement of Complaint[6], “an anomalous phrase that obscured the identity of the body (or bodies) that made that determination”. This is not the only case when agencies represented on the ERC decide the modification to the Entity List[7]. However, such case is indeed rare and prone to being questioned for lack of evidence showing due authorization of such agencies.

Generally, the plaintiff suing a government body may not obtain judicial relief if he has not first exhausted his/her administrative remedies[8]. Before initiating legal proceedings, YMTC and its Japanese subsidiary need to prove that they have explored all possible avenues for administrative remedy. YMTC and its Japanese subsidiary jointly submitted two identical FOIA requests to DOC and BIS respectively. Nevertheless, none of the request has been replied within statutory period, thereby constituting exhaustion of administrative remedy. Besides, it is worth mentioning that, according to the Statement of Complaint as mentioned above, “since the Final Rule about addition of Entity List was issued, YMTC and its Japanese subsidiary have submitted formal requests for removal from the Entity List to ERC. Nevertheless, the authorities have not acted on the requests.” This is not unusual since only very few Chinese entities have been successfully removed from Entity List. 

Beyond that, as a litigation strategy, the law firm Husch Blackwell has, ahead of YMTC and its Japanese subsidiary, submitted two FOIA requests to BIS solely in seeking of the final proposal and any accompanying attachments, exhibits, or appendices submitted to the ERC in support of its decision to list YMTC and its Japanese subsidiary into Entity List. Presumably, the law firm did so to pave the way as well as collect more evidentiary materials for its client. BIS “identified 553 pages of responsive documents but initially withheld the records in full”[9], citing FOIA exemptions for reasons of Exemption 1(national security), 3(specific exemption requirement from another statute), 5 and 6. “Husch Blackwell timely submitted an administrative appeal of BIS’s withholding decision and did not timely receive a decision on that appeal, thereby exhausting administrative remedies”[10]. After that, Husch Blackwell filed a suit against BIS. The court held that BIS “failed to provide sufficient detail” to demonstrate how the exemptions applied to the specific records at issue. The court found that declarations of the agency were “conclusory” and did not adequately link the claimed exemptions to particular documents or portions of documents[11]. Such ruling has to some extent secured a favorable position for YMTC in the following litigation.

YMTC and its Japanese subsidiary filed a lawsuit against DOC and BIS on September 3, 2025, seeking a court ruling to order the defendants to disclose the records requested, rather than remove the plaintiffs from Entity List. This is because according to section 1762 of <Export Control Reform Act> (ECRA), agency action under ECRA is not subject to common types of judicial review as stipulated in <Administrative Procedure Act> (APA). The exempted scope of judicial review thereof includes “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law” and “unwarranted by the facts to the extent that the facts are subject to trial de novo by the reviewing court”[12]. Therefore YMTC can hardly challenge BIS’s action under proper authorization of ECRA, which includes identifying foreign entities that are subject to specific licensing requirements for exporting, reexporting, or transferring items from the United States[13]. Nevertheless, in the case of Federal Express vs. U.S. Department of Commerce, the court has made it clear that ECRA does not explicitly exclude the review of agency actions deemed ultra vires[14]. Ultra vires is a Latin term that means "beyond the powers." In the legal context, it refers to actions or decisions made by individuals or entities that exceed their legal authority or powers[15].

It is noteworthy that although the plaintiffs have questioned the authority of the body which made the list-addition determination in the Statement of Complaint, namely the agencies represented on the ERC, which seems to point to ultra vires. The request of plaintiffs, nevertheless, is based on <Freedom of Information Act> (FOIA), the basic function of which is to provide the public with the right to request access to records from any federal agency. Another intriguing fact is that, in the lawsuit filed by Husch Blackwell, the plaintiff mentioned intial withholding by BIS of records requested by the plaintiff. Nevertheless, in the litigation case of YMTC, BIS has unexpectedly failed to respond to plaintiff’s FOIA request within statutory period in the first case, which happened during August 2025. It is hard not to connect the FOIA reply delay with the license permission delay of the Bureau and presumes further that such action of the same agency might arise from similar reason, a combination of multiple causes including policy shift, internal turmoil and staffing shortages, although the latter one has obviously attracted more extensive attention worldwide[16].From another perspective, the transparency litigation might as well be a potential strategy for YMTC to collect more substantial evidence before claiming relief under ultra vires. The inference as mentioned thereof still needs to be verified given that the case remains under judicial review. The coping strategy as well as subsequent plan of YMTC deserves wait and see.

By contrast, in the case of DJI vs.U.S. Department of Defense (DOD),etc.[17], DJI bluntly challenged the factual and legal grounds for DOD adding it into CMC list[18] and requested the court to invalidate the designation of DJI as CMC based on article 706 of APA to the point. Although the court has upheld DOD ’s designation and DJI further files an appeal in response[19], it is clear that legal countermeasure and litigation strategy for companies which are added into CMC list is apparently distinguished from those of entities in the export control blacklist.

As Benjamin Cardozo, the former justice of the Supreme Court also one of most influential jurists in the United States once put it, “in the end, the great truth will have been learned, that the quest is greater than which is sought, the effort finer than the prize, or rather, that the effort is the prize , the victory cheap and hollow were it not for the rigor of the game”. The key goal of Chinese companies in an extra-territorial lawsuit has never been limited to a favorable judgment. Demonstration of willingness to strive for rights of equal and free trade in an alien land by use of solid legal skills and mastered litigation instrument might be the intrinsic demand beneath the surface. Technically speaking, we might still have a long way to go. Nevertheless, it is the signal of fighting back in a legal and straightforward way when confronting unfair treatment from foreign public power that really matters. (end)

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结合自身既有内容积累和技术优势，充分贴近“走出去”企业境外投资业务的实务需求及具体操作流程，为“走出去”企业提供全方位、实操性、可落地的法律信息指引，帮助企业在实施海外投资过程中规避各类风险，实现投资目标。