As approved by the State Council, MOFCOM promulgated the Rules on Counteracting Unjustified Extra-territorial Application of Foreign Legislation and Other Measures (MOFCOM’s order No.1 in 2021, hereinafter referred to as the Rules) on January 9. After the promulgation, head of MOFCOM’s Department of Treaty and Law answered questions from the press on the Rules that are of interest to domestic and foreign media outlets and the public.

I.Some media outlets and the public would like to know more about the main considerations behind promulgating the Rules after it was published yesterday. Could you please brief us on the main considerations?

Answer: As approved by the State Council, MOFCOM promulgated the Rules mainly to protect the legitimate rights and interests of Chinese citizens, legal persons or other organizations.

First, we introduced the Rules to protect our legitimate rights and interests. Some country has long been pursuing unilateralism. In doing so, it not only prohibits economic exchanges between its own nationals and the countries concerned, but also coerce enterprises and individuals of other countries into stopping trade and economic activities with the countries concerned. These acts violate such principles of international law as sovereign equality, hinder international trade and capital flow across borders, undermine the normal international economic order, and are generally opposed by the international community.

The Chinese government always opposes unilateralism. Unjustified extra-territorial application of foreign legislation and measures has adversely affected Chinese enterprises’ normal economic and trade interactions. In order to protect the legitimate rights and interests of Chinese citizens, legal persons or other organizations, we have formulated and promulgated the Rules.

Second, we drew on foreign legislative experience in formulating the Rules. Since the 1990s, the United Nations has adopted a series of resolutions calling for the repeal of unilateral laws and measures with extraterritorial effects imposed on enterprises and individuals of other countries. Relevant countries (regions) have introduced relevant legislation that refuses to recognize the extraterritorial effects of these foreign laws and measures to protect their normal international economic and trade activities. In formulating and introducing the Rules, we referred to and drew on the practices of relevant countries (regions).

Third, the Rules will not affect China’s international obligations. The Rules shall not apply to China’s obligations concerning the extraterritorial application of foreign laws and measures under the international treaties concluded or joined by the People's Republic of China. The Chinese government has always honored its international obligations and will fulfill relevant international treaties in earnest as always.

In implementing the Rules, MOFCOM will work with relevant departments to maintain the normal economic and trade order, protect the legitimate rights and interests of market players of all kinds, and continue to foster a market-oriented, law-based, and internationalized business environment.

2. What are the institutional arrangements set out in the Rules to counteract unjustified extra-territorial application of foreign legislation and other measures so as to protect the legitimate rights and interests of citizens, legal persons and other organizations of China?

The Rules contains provisions in the following five aspects:

First, timely reporting. Where a citizen, legal person or other organization of China is subject to unjustified extra-territorial application of foreign legislation and other measures, namely being prohibited or restricted by foreign legislation and other measures from engaging in normal economic, trade and related activities with a third State (or region), he/it shall report such matters within 30 days.

Second, assessment and confirmation. The working mechanism will take into account various factors to assess and confirm whether there exists unjustified extra-territorial application of foreign legislation and other measures.

Third, issuing a prohibition order. If the working mechanism, upon assessment, confirms that there exists unjustified extra-territorial application of foreign legislation and other measures, it may decide that the competent department of commerce of the State Council shall issue a prohibition order.

Fourth, judicial remedies. Where a person, legal person or other organization of China suffers losses from unjustified extra-territorial application of foreign legislation and other measures, the former may institute legal proceedings in a people’s court in China and claim for compensation.

Fifth, punishment. The violation of the truthful reporting obligation and noncompliance with a prohibition order shall be punished accordingly.

3. The Rules provides that the working mechanism shall assess and confirm whether there exists unjustified extra-territorial application of foreign legislation and other measures. How will be such assessment carried out specifically?

According to Article 4 of the Rules, the State shall establish a working mechanism composed of relevant central departments. The working mechanism is led by the competent department of commerce of the State Council, and the specific matters thereof are handled by the competent department of commerce and the department of development and reform in conjunction with other relevant departments of the State Council. The working mechanism shall fulfill its responsibility specified in the Rules.

When assessing and determining whether there exists unjustified extra-territorial application of foreign legislation and other measures, the working mechanism shall, on a case-by-case basis, take into overall account the factors set forth in Article 6 to conduct assessment and confirmation in a prudential manner in accordance with law.

4. According to the Rules, how will relevant government departments support and assist the citizen, legal person or other organization of China affected by unjustified extra-territorial application of foreign legislation and other measures?

The Rules provides that relevant government departments may provide support and assistance from two perspectives. First, providing guidance and services. Relevant departments provide guidance and services for citizens, legal persons or other organizations of China according to their respective duties. Second, providing necessary support. Where, in adherence to the prohibition order, a citizen, legal person or other organization of China suffers significant losses resulting from non-compliance with the relevant foreign legislation and other measures, relevant government departments may provide necessary support based on specific circumstances.

V. The Rules contained provisions on prohibition. Will the first prohibition order be released soon? Which foreign legalization and measures will be involved?

The Rules do not target any specific country or areas of transaction. As they are implemented, its working mechanism will closely follow the unjustified extra-territorial application of foreign legislation and measures, and will proceed in accordance with the Rules should the circumstances provided for are found.

VI. Article 12 of the Rules sets out that the Chinese government may take necessary counter-measures against the unjustified extra-territorial application of foreign legislation and other measures. Can you specify on that ?

The Chinese government has all along adopted an independent foreign policy and adhered to the basic norms governing international relations, featuring mutual respect for sovereignty, non-interference in others’ internal affairs, equality and mutual benefits. We object to any unilateral sanction that prejudices the legitimate interests of other countries.

Should the extra-territorial application of foreign legislation and other measures breach the international law and basic norms governing international relations, and undermines the legitimate interests of Chinese citizens, legal persons or other organizations, the Chinese government may take necessary countermeasures based on actual circumstances and needs.

(All information published on this website is authentic in Chinese. English is provided for reference only.)