On September 9, the Commerce Department’s Bureau of Industry and Security (BIS) published an interim final rule to clarify how American industry can participate in international standards-setting activities when interacting with entities on the Entity List.
In issuing the final rule, BIS stated that it is responding to concerns raised by industry leaders, commenters, and academics that licenses are required to release low-level technology for standards-related activities to parties on the Entity List, namely Huawei and its affiliates. BIS stated that American involvement in standards development organizations is a national security and economic imperative as internationally accepted standards related to emerging technologies like cloud security, 6G and crypto “serve as the building blocks for product development and help ensure the functionality, interoperability, and safety of products.” BIS stated that it is making the revisions to ensure that export controls and associated compliance concerns related to the Entity List do not impede U.S. leadership and participation in standards-setting activities.
BIS added Huawei to the Entity List on May 16, 2019. BIS subsequently added more than a hundred Huawei affiliates to the Entity List.
On June 18, 2020, BIS published its first interim final rule excepting license requirements for the release of low-level technology to international standards-setting organizations for contribution to developing or revising standards. The June 2020 interim final rule revised the Huawei listing to allow for exports without a license of low-level technology to Huawei for standards-setting purposes.
The new final rule seeks to clarify the June 2020 rule to allow for broader participation in standards-setting discussions. It removes the license requirement and authorizes the release of certain technologies subject to the Export Administration Regulations (EAR) to entities on the Entity List, including Huawei and its non-U.S. affiliates, when that technology transfer occurs in a standards-related activity. The new rule defines a standards related activity as an “activity required for the development, adoption or application of a standard, where there is an intent to publish the resulting standard.” Additionally, the rule broadens the scope of the authorization to include all entities on the Entity List and authorizes the release of EAR99 and Anti-Terrorism (AT) only controlled software and technology, and software and technology for specified cryptographic functionality.
While the new rule should ease concerns over whether a license requirement is necessary to release technology to entities on the Entity List concerning legitimate standards-setting and development discussions, other export controls may still apply. Companies and organizations must understand that the rule only addresses Entity List-related licensing requirements specific to standards-setting activities and continue to comply with the applicable controls.
If you have any questions or need assistance related to this evolving situation or other international trade matters, please contact the author.