The U.S. Recently Erected a New Hurdle to U.S.-China Academic Cooperation. Here’s What It Might Mean.

As relations between China and the U.S. have run hot and cold over the past few decades, academic exchanges and cooperation between the two countries have long served as reassuring linkages, signaling that people-to-people ties could survive fluctuations in the overall temperature of the relationship. Since the late 1970s, many U.S. and Chinese universities have forged deep and close cooperative arrangements for the exchange of students, scholars, and research. Chinese students still represent, for instance, the largest source of foreign students studying in the U.S. university system. Numerous U.S. universities have signed formal partnerships with Chinese universities to share research and offer joint academic programs.

However, a recent move by the U.S. Department of Commerce reminds us that academic relationships are not immune from the effects of deteriorating U.S.-China relations. In April 2019, the Department included several Chinese universities on its Unverified List (UVL)—most notably, Renmin and Tongji Universities, prestigious, highly ranked schools with many ties abroad. While being placed on the UVL is not the most serious action the U.S. government can take against a Chinese university, the UVL episode illustrates some of the obstacles facing deeper U.S.-Chinese academic cooperation in the future. Such cooperation will not likely come to an immediate, screeching halt because of the designation, but it is easy to imagine that there may be longer-term, more subtle effects as U.S. universities begin to think twice about working with their Chinese counterparts.

What Is the Unverified List?

The UVL is part of a broader system of U.S. export controls designed “to restrict the export of items which would make a significant contribution to the military potential of any other country or combination of countries which would prove detrimental to the national security of the United States . . .” Export laws apply to more than just military items, however, because many civilian technologies that have non-military purposes can have a “dual use,” meaning the product could be used by foreign military or intelligence services to threaten U.S. national security. Moreover, export laws apply to more than just a finished good. They also apply to any transfer of controlled technology, services, knowledge, or software code by physical, electronic, oral, or visual means. Such laws do, however, exempt sharing of “fundamental research.”

A key player in this system is the U.S. Commerce Department’s Bureau of Industry and Security (BIS). BIS is the lead U.S. government agency in charge of administering the enormously complex and extensive U.S. government program for controlling and regulating exports from the United States.

The U.S. export control system rarely results in a complete export ban. Rather, it is a way of “controlling” exports by having BIS review and, in many cases, impose conditions on the export of particular technologies on a user-by-user basis. This means BIS makes a determination about the nature of the individual person or entity that will be using the exported technology. Indeed, these determinations about the reliability of individual entities and persons is a large part of BIS’ work.

BIS makes public its determinations on lists of individual parties of concern. These lists are made public to provide guidance to U.S. exporters. BIS publishes three lists: the “Denied Persons List,” the “Entity List,” and the “Unverified List.” Each of the three lists have very different legal consequences.

Inclusion on the “Denied Persons List” (DPL) is the most serious form of individualized export control. Any individual or entity placed on the DPL is prohibited, without exception, from conducting any transactions with people or companies residing in the U.S. DPL entities have usually been found to have violated U.S. export control laws, including re-exporting U.S.-origin technology to a country under a U.S. embargo. For instance, in July 2019, the U.S. placed two dual Iranian-U.S. nationals and their company on the Denied Persons List for 10 years due to their alleged conspiracy to evade U.S. export control regulations. The Chinese telecommunications company ZTE was also placed on the DPL for violating export controls on Iran, but it was taken off that list after negotiating a settlement with BIS, paying a large fine, and promising to subject itself to additional sanctions-compliance supervision.

Inclusion on the Entity List (“EL”) is also an export ban, but, unlike the DPL, there are exceptions. A U.S. person can apply to BIS for an export license to continue to trade with persons or companies on the EL. Thus, entities on the EL are believed to present a risk of diverting U.S. goods or services in ways contrary to U.S. national security interests, but such risks can be mitigated or controlled through judicious use of BIS’ export licensing authority. Recently, the high-profile Chinese telecommunications company Huawei was added to the EL, but the U.S. government has also announced that some exports to Huawei would be continued under licenses granted by BIS. BIS has previously placed other Chinese universities on the EL. For instance, BIS placed the Beijing University of Aeronautics and Astronautics on the list in 2001, due to concerns about the university’s role in the transfer of technology and goods to the Chinese military.

Compared to the DPL and the EL, the UVL is the least serious designation BIS can make. Periodically, BIS will conduct “end-use” checks—something like a routine audit—to verify its licenses are being complied with. When such an end-use check cannot be completed “satisfactorily for reasons outside of the U.S. Government’s control,” BIS may place the end user on the UVL. Significantly, this does not mean that the U.S. government is accusing the end user of wrongdoing—it only means that the end user’s information was missing or incomplete, and that the government was unable to verify it.

As the least serious designation, the UVL also has the least serious legal consequences. Parties may continue to deal with UVL entities in exactly the same way they deal with other partners they work with, with two exceptions. First, BIS sometimes grants a general exception for certain products that would otherwise require an export license. These general exceptions mean that in certain circumstances (often when the controlled good is being exported in limited quantities), an exporter can simply export the controlled good without going through the laborious process of obtaining an export license. These general exceptions, however, cannot be used by an entity listed on the UVL. Second, U.S. persons must also obtain a statement from the UVL entity attesting to its willingness to comply with the conditions of U.S. export control laws, before they can work with the entity.

What Does the Unverified List Have to Do with Chinese Universities?

This background and context helps us better understand the significance of placing Chinese universities on the UVL. First, it means that these universities were not selected at random. They could only have been on the UVL if they were subject to an end-user check by BIS. They were subject to the end-user check because U.S. exporters listed those universities as recipients of certain exports that are subject to U.S. export control laws.

Second, placing these universities on the UVL does not mean that BIS has made a determination that the institution is unreliable and prone to illegally transferring U.S. technology. (Such a determination would have placed the university on the Entity List or, in extreme circumstances, the Denied Persons List.) Instead, what it means is that BIS was unable to obtain certain basic information, and was therefore unable to verify that the terms of export licenses are being complied with. It seems likely that BIS sought, but did not receive, information from Renmin and the other Chinese universities on the list about how those universities were using particular U.S. goods that are subject to an export license. We don’t know why this information was unavailable; no specific explanation is provided when entities are placed on the UVL. It is possible that the universities may simply not have kept good enough records to satisfy BIS requests. Or, because BIS requires local government consent to conduct end-user checks, it is possible that Chinese government authorities failed to respond to BIS inquiries seeking such consent out of neglect or deliberate non-cooperation.

Third, it is important to keep in mind that UVL designations are not permanent and BIS regularly removes entities from the UVL upon receiving the information it had previously been missing. In July 2019, BIS announced it had removed eight entities from the UVL, all of which were Chinese entities. It is entirely possible that the Chinese universities added in April 2019 can appeal to be removed from the UVL if they are able to satisfy whatever concerns put them on the UVL to begin with.

Fourth, even if the Chinese universities stay on the UVL, U.S. universities can continue to pursue academic partnerships with them—there is nothing in U.S. law that categorically prohibits U.S. universities from cooperating with UVL-listed Chinese universities. U.S. universities would have to provide both detailed contact information and a thorough description of the end use of any controlled U.S.-origin goods, services, and technology being shared with the Chinese university. The Chinese university would simply have to provide a UVL statement promising to comply with future end-user checks by BIS. To be sure, this compliance requirement may deter some U.S. universities from pursuing future academic collaborations in China, but it is not a prohibition.

What Do the Unverified List Listings Mean in the Broader Context?

The April 2019 UVL designations are a small part of the broader U.S. government effort to regulate and limit the transfer of sensitive technology to China via academic exchanges. As others have documented, the U.S. government has limited the length of visa stays for Chinese researchers, toughened enforcement of regulations limiting obtaining research grants from Chinese sources, and brought numerous prosecutions for “economic” espionage against Chinese nationals working at U.S. companies. The stepped-up enforcement of U.S. export laws, including the placement of Chinese academic institutions on the UVL, is probably one of the least intrusive and alarming of these various U.S. government measures. For most entities listed, the UVL is more of a hassle than anything else.

At the same time, however, top Chinese universities’ inclusion on the UVL is a sign of how quickly relations between the U.S. and China—even non-governmental, non-business relations—are under new strains. While the UVL has existed for years, it is hard to see how these new inclusions are not tied to increased tensions in the U.S.-China relationship. As long as U.S.-China tensions continue to spiral upward, we should expect more UVL designations, or even additions of Chinese universities to the more restrictive Entity List. Such escalations will not end all U.S.-China academic collaborations, but they will certainly discourage new ones. The UVL designations are just another sign that we have passed the peak of U.S.-China academic cooperation, and that the future for such cooperation looks increasingly dark and unpromising.