The US Department of Commerce has blacklisted DJI. The world’s largest drone manufacturer was added to the agency’s “Entity” list, along with 76 other companies, including other Chinese technology companies and research institutions.
Amid mounting tensions between the US and China, DJI has battled concerns about the security of its platform and legislative attempts to ban Chinese-made drone technology from government drone programs. The Justice Department banned the purchase of DJI drones using program funds: The Interior Department crashed its DJI drone fleet despite working with the company to reassure them about data security.
DJI recently had some good news when the US National Defense Authorization Act went through with no blanket restriction on DJI drones. However, this latest news that the Department of Commerce has blacklisted DJI is sure to have an impact on the company’s U.S. market – and potentially force them to make significant changes.
What does inclusion in the “Entity List” mean?
Inclusion on the list means first that DJI has been identified as having “a significant risk of engaging in or engaging in activities that are contrary to the national security or foreign policy interests of the United States.” In addition, listing could limit DJI’s ability to source components in the United States (EAR refers to Export Administration Regulations, BIS refers to the Bureau of Industry and Security).
The EAR (15 CFR parts 730-774) imposes additional license requirements for exports, re-exports and transfers (within the country) to listed companies and limits their availability. The license verification policy for each listed entity is specified in the License Verification Policy column in the entity list. The effects on the availability of license exemptions are described in the relevant notice from the federal registry on adding entities to the entity list. BIS includes entities in accordance with Part 744 (Control Policy: End-User and End-Use-Based) and Part 746 (Embargoes and Other Special Controls) of the EAR in the entity list.
For four of the seventy-seven companies – AGCU Scientech, China National Scientific Instruments and Materials (CNSIM), DJI, and Kuang-Chi Group – BIS has a case-by-case policy for reviewing licenses for items required to detect, identify and detect are infectious disease treatment and presumption of denial for all other items subject to the EAR.
Why DJI was blacklisted
Proposed bans on DJI drones have spearheaded data security, allegations that DJI has worked hard to refute. Surprisingly, the announcement by the federal register of the entity list names a completely different reason for the DJI blacklist: the support of human rights abuses.
The ERC decided to add the AGCU Scientech entities; China National Scientific Instruments and Materials (CNSIM); DJI; and Kuang-Chi Group for activities that run counter to US foreign policy interests. In particular, these four units have enabled widespread human rights violations in China through abusive genetic collection and analysis or high-tech surveillance and / or facilitated the export through China of items that, contrary to US foreign policy, support repressive regimes worldwide interests.
Inclusion on the list may affect DJI’s saleability in the US: According to current estimates, the company has a market share of between 65 and 78%.
Miriam McNabb is editor-in-chief of DRONELIFE and CEO of JobForDrones, a marketplace for professional drone services, and a fascinating observer of the emerging drone industry and the regulatory environment for drones. Miriam has authored over 3,000 articles focusing on the commercial drone space and is an international speaker and recognized figure in the industry. Miriam graduated from the University of Chicago and has over 20 years experience in high tech sales and marketing for new technologies.
For advice or writing in the drone industry, email Miriam.
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