Introduction

As low-altitude economy products are progressively applied in real-world scenarios, the United States has strengthened export controls on related items, mainly through BIS according to EAR placing relevant enterprises on Entity List, expanding controlled items scope, and increasing penalties on violating entities. Sanctioned enterprises mainly focus on drones, eVTOL and related components, software, and technology, with reasons including “national security” and “military use.”

I. Recent BIS Sanctions Involving China’s Low-Altitude Economy

A. Placing DJI and Suppliers on Entity List

December 22, 2020, BIS added DJI to Entity List, restricting access to most US-controlled items. June 2024, BIS added Autel Robotics to Entity List. May 2024, added Shenzhen Yidian Technology, Beijing Zhongshang Dingsheng, Chengdu Zongheng, and AEE to Entity List, claiming they obtained US-controlled items for Chinese military entities.

B. Severe Penalties for EAR Violations

August 15, 2024, BIS imposed $5.8 million civil penalty on TE Connectivity Corporation and TE Connectivity HK Limited for exporting controlled items to Chinese entities including China’s Aerodynamics Research and Development Center and Northwestern Polytechnical University without licenses.

C. New Rules Strengthening Controls

January 2025, BIS published proposed rule on “Securing ICT Supply Chain: Unmanned Aircraft Systems,” addressing ICTS transactions in UAS, requesting public comments.

II. Impact of BIS Export Controls on Low-Altitude Economy Enterprises

A. Supply Chain Instability from Controlled Items Restrictions

US controls on controlled items may cause domestic drone products difficulty obtaining US-controlled items including aircraft engines, infrared imaging equipment, and high-precision inertial measurement devices, creating supply chain rupture risks.

For enterprises unable to achieve technology autonomy with some key components like high-performance chips dependent on US, product update and iteration difficulties increase due to controlled items supply restrictions.

B. Long-Arm Jurisdiction Limiting Supply to Specific Customer Groups

Due to De Minimis Rule and Direct Product Rule, US can extend export control jurisdiction to foreign companies’ transactions involving US components. Enterprises selling products containing US components to sanctioned countries or Entity List entities may violate EAR without licenses.

C. Increased Compliance Costs

To maintain supply chain stability and avoid products falling within controlled items scope, enterprises may need to adjust production lines and seek alternative components, software, and technology, increasing direct costs.

III. Enterprise Response Recommendations

A. Strengthen Components Inspection and Supply Chain Management

Inspect components in production and assembly processes, determine if US-origin components or “foreign products” meeting EAR jurisdiction exist, control US-controlled items proportion in products.

B. Emphasize Customer Background Investigation, Focus on End Users and End Uses

Strengthen screening of transaction counterparties against Entity List, monitor whether transaction counterparties have EAR red flags, continuously track changes in end users and end uses.

C. Strengthen Enterprise Compliance Awareness, Continuously Monitor Legal Changes

Conduct regular export control regulations training for employees, ensure employees have some understanding of export control and sanctions systems to proactively identify and report potential compliance risks.

D. Engage Professional Legal Service Teams

In complex global trade environment with increasingly tightened export controls and sanctions, professional legal support ensures compliant operations.