foreign direct product rule huawei august 2020

Foreign Direct Product Rule: Footnote 1 On May 15, 2020, BIS issued an interim final rule to expand the applicability of General Prohibition Three of the EAR as related to Huawei. In addition, foreign-produced items are subject to the EAR (1) if they contain a certain percentage of controlled U.S.-origin content (the de minimis rules, see § 734.4 of the EAR), or (2) if the foreign-produced item is subject to § 736.2(b)(3) of the EAR (the foreign-produced direct product rule). Exports or re-exports that were. On May 19, 2020 and August 17, 2020, BIS issued Final Rules expanding General Prohibition Three's controls on foreign-produced items that are the direct product of certain U.S. technology or software. (C) Entity List Foreign-Produced Direct Product Rule of August 17, 2020 (see footnote 1 to Supp. On May 15, 2020, BIS amended its foreign direct product rule in an effort to further limit Huawei's access to U.S. technology, including from foreign semiconductor manufacturers that rely on U.S. technology or software, such as U.S. Electronic Design Automation software or U.S. production or testing equipment. The Department of State strongly supports the Commerce Department's expansion today of its Foreign Direct Product Rule, which will prevent Huawei from circumventing U.S. law through alternative chip production and provision of off-the-shelf (OTS) chips produced with tools acquired from the United States. For several months, BIS has been rumored to be considering changes to both the de minimis and foreign direct product rules to close what erroneously were being characterized as loopholes in the application of U.S. export controls to Huawei. Measures like these are expected to impact Huawei's chip division HiSilicon, . Background to the Foreign Direct Product Rule . 4 of part 744 of the EAR that are subject to § 736.2(b)(3)(vi) and now require a license pursuant to this . This is the second time BIS has expanded the EAR's "Direct Product Rule" for shipments involving Huawei. This raised the total to 152 affiliates. On August 17, 2020, the Department of Commerce, Bureau of Industry and Security (BIS) issued a final rule (the Final Rule) (1) adding additional Huawei non-US affiliates to the Entity List, (2). BIS Final rule: Huawei Technologies Co., Ltd. (Huawei) and a number of non-U.S. affiliates have been placed on the Entity List. In May 2020, BIS amended the EAR's foreign-produced direct product (FPDP) rules to designate the following items as "subject to the EAR": (i) foreign-produced items produced or developed by a Huawei Entity List affiliate through the use of technology or software controlled . This includes enforcement of the Final Direct Product Rule issued by the BIS in August 2020 restricting Huawei's access to U.S. technologies. Expansion of the Huawei Foreign-Produced Direct Product Rule. On May 15, 2020, the U.S. Department of Commerce, Bureau of Industry and Security (BIS) issued an interim final rule (the Interim Rule) amending the direct product rule under the Export Administration Regulations (EAR) to further restrict Huawei Technologies Co., Ltd. (Huawei) and its affiliates designated on the Entity List from receiving semiconductor and other products produced outside the . On August 17, 2020, BIS added an additional 38 Huawei affiliates to the Entity List—bringing the total number of unique designated Huawei companies to 153. 51596 Federal Register/Vol. The new rule expands the Export Administration Regulations' (EAR's)… In 2019, the Administration placed Huawei and over 100 of its subsidiaries on the Entity List that bars any sales of . The rules placed restrictions on transactions wherein U.S. software or technology is the basis for a foreign-made item produced, purchased, or incorporated to any item made or ordered by a Huawei affiliate that is designated by footnote 1. Their staff report on . been extended to August 13, 2020. Companies could apply for a license to continue their operations, however the administration said that the presumption would be to deny these requests. The Trump administration has agreed to changes to the Foreign Direct Product Rule, which subjects some foreign-made goods based on U.S. technology or software to comply with U.S. regulations. The Foreign Direct Product Rule. . Comments must be submitted by 14 July 2020. On August 17, 2020, the US Commerce Department's Bureau of Industry and Security ("BIS") issued a final rule ("Final Rule") (i) expanding the Export Administration Regulations ("EAR") General Prohibition Three (the foreign-produced direct product rule, or the "FPDP Rule") to further restrict Huawei Technologies Co. Ltd. and its affiliates designated on the BIS Entity List Foreign-Produced Direct Product Rule Amendments. US Government extends Huawei Temporary General License to August 13, 2020 and revises the EAR's Foreign-Produced Direct Product Rule to target Huawei's acquisition of semiconductors that are the direct product of certain US technology or software May 20, 2020 By International Trade Compliance Blog 2 Mins Read BIS Creates a Special "Direct Product" Rule for Huawei. As described in our prior alert in May 2020, BIS previously amended the EAR General Prohibition Three - the so-called foreign-produced direct product rule - to restrict supply to Huawei designees of foreign-made items (such as semiconductors) that are (a) developed or produced by Huawei designees and the direct product of certain software . BIS Issues Rules on the Scope of Entity List Restrictions and Significantly Limits Activities Involving Huawei On August 17, 2020, the US Commerce Department's Bureau of Industry and Security (BIS) issued two final rules that expand the scope of licensing requirements for transactions involving parties on the Entity List. On August 20, 2020, the U.S. Department of Commerce, Bureau of Industry and Security ("BIS") published a final rule that further tightens restrictions under the Export Administration Regulations ("EAR") on Huawei Technologies Co., Ltd. and its affiliates designated on the Entity List administered by BIS ("Huawei") (the "Final Rule"). Such foreign-produced items will require a license when there is knowledge (or reason to know) that they are destined for reexport, export from abroad, or transfer (in-country) to Huawei or any of its affiliates on the Entity List. In May 2020, BIS amended the EAR's foreign-produced direct product (FPDP) rules to designate the following items as "subject to the EAR": (i) foreign-produced items produced or developed by a Huawei Entity List affiliate through the use of technology or software controlled . The rule was effective May 15, 2020, the date on which it . on august 17, 2020, the us department of commerce, bureau of industry and security ("bis"), issued a final rule further restricting huawei technologies and its non-us affiliates (collectively, "huawei") from access to us technologies ("rule"). On May 15, 2020 the Commerce Department announced an amendment to the direct product rule that further restricts the ability of Huawei Technologies Co., Ltd. and its affiliates on the Entity List, such as HiSilicon (collectively "Huawei"), to receive certain foreign-made semiconductor products. To help close these holes, BIS has expanded restrictions on General Prohibition Three, which describes the FDPR. On May 15, 2020, the U.S. Department of Commerce's Bureau of Industry and Security ("BIS") announced an amendment to the General Prohibition Three, also known as the foreign-produced direct product rule, by exercising existing authority under the Export Control Reform Act of 2018. 1 the rule (1) adds 38 huawei entities to the bis "entity list" and removes the temporary general … Section 736.2(b) of the EAR includes ten . The US has expanded its Foreign Direct Product Rule in an attempt to prevent Huawei, a Chinese tech company, from finding a way around American law through alternative chip production and provision of off-the-shelf (OTS . Effective August 17, 2020. This rule is effective August 17, 2020. Commerce announced on the same day that the Temporary General License authorizing specific types of transactions involving the listed Huawei entities has been extended to August 13, 2020. The US Bureau of Industry and Security has published updated FAQs relating to an amendment to the foreign direct product rule (FDP rule) contained in the EAR that was published in August 2020. On August 17, 2020, BIS added an additional 38 Huawei affiliates to the Entity List—bringing the total number of unique designated Huawei companies to 153. Start Further Info . The August 17 Final Rule further modifies amendments to the Foreign-Produced Direct Product Rule released on May 15, 2020 (the "May 15 Interim Final Rule") in response to public comments and, interim final rule" amends the foreign direct product rule so that two types of By ANI | Published: August 18, 2020 03:05 AM 2020-08-18T03:05:10+5:30 2020-08-18T03:20:02+5:30. On May 19, the US Department of Commerce's Bureau of Industry and Security (BIS) published a new interim final rule, retroactively effective on May 15, amending the Foreign-Produced Direct Product Rule (FPDP) under the US Export Administration Regulations (EAR).The new rule expands the jurisdictional scope of the EAR and restricts the non-US supply of semiconductor chips to Huawei . On August 17, 2020, the Bureau of Industry and Security (BIS) at the Department of Commerce announced it was tightening restrictions on Huawei's access to American technology through a new rule that: (1) further amends BIS' foreign direct product (FDP) rule to restrict Huawei's access to items produced using U.S.-origin technology, software, or equipment; (2) adds a number of additional . On May 15, 2020 the Commerce Department announced an amendment to the direct product rule that further restricts the ability of Huawei Technologies Co., Ltd. and its affiliates on the Entity List . By this amendment, BIS expended its export control against Huawei to require . Continuing a trend of restricting exports to certain foreign entities, the U.S. government took two actions on May 15, 2020, to further control exports of certain technologies deemed critical to US interests: 1. "The Administration has consistently viewed Huawei and its various subsidiaries as surrogates for the Chinese government and thus sought to hobble Huawei's growth at every turn. FAQ 9 provides that the expanded foreign direct product rule generally does not require a license for the servicing or repair of an item lawfully exported prior to the implementation of the August 2020 rule. Extending the temporary general license (TGL), originally . This . In August 2020, the Department of Commerce issued a Final Rule further restricting access by Huawei to U.S. technologies by adding additional non-US affiliates of Huawei to the Entity List, removing the Temporary General License for Huawei and replacing it with a more limited authorization, and expanding the scope of Foreign Direct Product Rule . No. Asserting that Huawei has taken advantage of a "loophole," Secretary of Commerce Ross on Friday, March 15, 2020, announced an amendment of the direct product rule that for now applies only to Huawei and its affiliates on the Entity List. However, Huawei has still been able to source U.S. origin chipsets and schematics through holes in BIS jurisdiction due to the foreign direct product rule (FDPR) that places certain goods outside of the jurisdiction of BIS. over Foreign-Made Items in Huawei's Contract Manufacturing Supply Chain May 19, 2020 . In order to further address the continuing threat to U.S. national security and foreign policy interests posed by Huawei and its non-U.S. affiliates, BIS in this final rule is making three . August 2020: The Foreign direct product rule . The interim final rule is effective as of 15 May 2020. It also amended the Foreign Direct Product Rule tightening the restrictions on how technology could be supplied to Huawei. Foreign Direct Product Rule: Footnote 1. As we previously summarized, in May 2020, BIS expanded the foreign-direct product rule to require a license for broad categories of items - including, notably, semiconductors - when the items are produced or developed by Huawei and the non-U.S. manufacturer has knowledge that item is destined for Huawei. For new entities, TGL removal, and the FDPR relating to the foreign direct product of the technology and software ECCNs, the rule is effective nearly immediately. The proposed rule change requires foreign companies that use U.S. chip making equipment to obtain a license before they can supply certain semiconductor chips to Huawei. [1] Addition of Huawei Non-U.S. Affiliates to the Entity List, the Removal of Temporary General License, and Amendments to General Prohibition Three (Foreign-Produced Direct Product Rule) On August 19, 2020 / Business (collectively, "Huawei"). Expanding the direct product rule to further restrict exports to certain entities including Huawei and/or its affiliates. Foreign-made items that are produced by a non-U.S. plant or major component of a non-U.S. plant if that plant or major component is itself a direct product of U.S.-origin technology or software classified under those ECCNs. What is the Direct Product Rule? On May 19, 2020, the US Department of Commerce's Bureau of Industry and Security (BIS) published an interim final rule that imposes additional restrictions on the provision of certain foreign-made products to Huawei Technologies Co., Ltd and most of its non-US affiliates (collectively, Huawei). August 18, 2020 Print On August 17, 2020, the U.S. Department of Commerce Bureau of Industry and Security (BIS) made available for public inspection a final rule expanding restrictions on Huawei Technologies Co., Ltd. and its non-U.S. affiliates on the BIS Entity List (collectively "Huawei"). On August 17, 2020, the US Commerce Department's Bureau of Industry and Security ("BIS") issued a final rule ("Final Rule") (i) expanding the Export Administration Regulations ("EAR") General Prohibition Three (the foreign-produced direct product rule, or the "FPDP Rule") to further restrict Huawei Technologies Co. Ltd. and its affiliates designated on the BIS Entity List . On May 19, the US Department of Commerce's Bureau of Industry and Security (BIS) published a new interim final rule, retroactively effective on May 15, amending the Foreign-Produced Direct Product Rule (FPDP) under the US Export Administration Regulations (EAR). That is, if a foreign-made product incorporates less than 25% U.S.-origin content, it is not subject to the EAR and may be exported by the foreign manufacturer to Huawei. Direct Product Rule When products are manufactured overseas, but are based on certain U.S. technology, the products may be considered a "direct product" of U.S. technology . 4 to part 744 and § 736.2(b)(3)(vi) of the EAR) Foreign-produced items are subject to the EAR if either of the follow applies: (a) When it is a direct product of "technology" or "software" that is: Subject to the EAR; and - General Prohibition 3: Foreign-Produced Direct Product (FPDP) Rule expansion for Huawei • August 17, 2020 Final Rule - 38 non-U.S. affiliates added to Entity List - Removed a temporary general license for Huawei and its non-U.S. affiliates and replaces those provisions with a more limited authorization - Further tightening of the . […] August 17 Final Huawei Direct Product Rule When adopting the final Huawei Direct Product Rule on August 17, however, BIS implemented amendments to the Rule to further "prevent Huawei's attempts to circumvent U.S. export controls to obtain electronic components developed or produced using U.S. technology." This rule specifically targets Huawei's acquisition of semiconductors that are a product of U.S. software. Effective May 15, 2020,1 the U.S. Department of Commerce's Bureau of Industry and Security (BIS) issued an interim final rule that further tightens export controls on Huawei Technologies Co. Ltd. of China and its 100-plus affiliates that are also listed on BIS's Entity List with a footnote 1 designation (collectively, "FN1E"). The U.S. Commerce Department, Bureau of Industry and Security ("BIS") published a final rule on May 21, 2019, adding the largest telecommunications-equipment manufacturer in the world, Huawei Technologies Co., Ltd., and 68 of its non-US affiliates (collectively, "Huawei"), to BIS's Entity List.See 84 FR 22961.This rule imposes an export license requirement for all exports, reexports . 85, No. Therefore, if a foreign-made item is based off of certain U.S. technology, it may be classified as a "direct product" and subject to the EAR. Asserting that Huawei has taken advantage of a "loophole," Secretary of Commerce Ross on Friday, March 15, 2020, announced an amendment of the direct product rule that for now applies only to Huawei and its affiliates on the Entity List. May.18.2020. Even if a good sat below the de minimis requirement, some firms were still barred from selling to Huawei depending on the nature of the goods sold. For prior information on Huawei BIS Entity Listings, see Updates of May 17, 2019, and August 19, 2019. Another regulation, the Foreign Direct Product rule, was amended to impose new controls on all 1,400 organizations on the entity list when it comes to purchasing foreign-produced chips or chip . 162/Thursday, August 20, 2020/Rules and Regulations DEPARTMENT OF COMMERCE Bureau of Industry and Security 15 CFR Parts 736, 744 and 762 [Docket No. The Department of Commerce's Bureau of Industry and Security (BIS) has issued an Interim Final Rule amending General Prohibition Three, also known as the foreign-produced direct product reexport rule, so that this General Prohibition applies to certain additional foreign-made items destined for certain persons designated with a new footnote on BIS' Entity List. 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