Executive Order on Amending Executive Order 13959–Addressing the Threat from Securities Investments that Finance Communist Chinese Military Companies [REVOKED]

Date issued: Jan. 13 2021

TURBOFAC Commentary (375 words)

Notes:

[On 6-3-2021, this EO was revoked in its entirety by EO 14032] Note that EO 14032 removed the key substantive change that this EO made to the original EO 13959, i.e. notion of the mere "possession" of a covered security being prohibited subsequent to the closing of the "divestment window".

1) For consolidated commentary on EO 13959, as amended, refer to Consolidated Comment on the Chinese Military Companies Sanctions Under the EO Issued June 3, 2021.

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2) Summary of amendments made to EO 13959 by this now-revoked EO:

a) Section 4(e) was amended so that “transactions” within the scope of the prohibition explicitly include the “sale” of covered securities. Prior to the amendment, “sales” were judged by OFAC to be within the scope of the prohibition that applied on its face to “purchases for value,” but this is now explicit.

b) The “divestment carveout” sections 1(b)-(c) were amended to (i) replace “purchases for value or sales” with the word “transaction,” reflecting the fact that the term “transaction” now includes all purchases for value and sales, and (ii) to specify that “possession of [covered] securities by a United States person is prohibited” after the divestment carveout expires. Prior to the amendment, the mere holding of a covered security subsequent to the expiry of the divestment carveout did not appear to be prohibited (expressly or impliedly).

c) Section 4(a)(ii) and (iii) were amended to make what appear to be technical changes. Reference to “determin[ations]” of CCMC status by the Secretary of Defense have been replaced with “public[] list[ings].” Compare FAQ 864. This may have been done to clarify that the "clock" on the effective date of prohibitions starts running as of the date of a public listing by the Secretary of Defense, rather than the date of a “determination” (which may theoretically precede the public listing).

In addition, the following clarifying language was added to end of section 4(a)(ii):

"This definition shall apply regardless of whether the Secretary of Defense must provide the report described in section 1237(b)(2) of Public Law 105-261, as amended by section 1233 of Public Law 106-398 and section 1222 of Public Law 108-375."