BIS repeatedly extended the TGL until August 13, 2020.10, In issuing the August 17 Huawei Rule, BIS determined that the previous authorizations for transactions related to "continued operation of existing networks and equipment" and "support to existing 'personal consumer electronic devices' and 'Customer Premises Equipment'" no longer warrant being included in the EAR and should be allowed to expire. BIS will apply a general presumption of denial when reviewing any license applications concerning Huawei and the other listed Huawei affiliates, however the Federal Register notice does contain a Savings Clause permitting the completion of certain shipments that were en route to any of the Huawei Entity List designees on or prior to May 16, 2019, subject to certain eligibility … Chinese telecom’s purchases of U.S.-made semiconductor components will come under closer scrutiny during BIS export license approvals. Two savings clauses apply to items caught by the new Huawei-specific DPR. The Commerce Department said there are now more than 100 persons or organizations on the Entity List with ties to Huawei Technologies. The Commerce Department’s Bureau of Industry and Security has added Chinese telecommunications giant Huawei Technologies Co. Ltd. and 68 affiliates in 26 countries to its Entity List. BIS previously added Huawei and 114 of its non-US affiliates to the Entity List.7 The August 17 Huawei Rule also makes minor revisions to existing entries on the Entity List for three Huawei entities in China and one in Brazil. In addition, footnote 1 to the Entity List (FN1) was added to the License Requirement section of the Entity List. Such awareness is inferred from evidence of the conscious disregard of facts known to a person and is also inferred from a person's willful avoidance of facts." BIS took three actions in the August 17 Huawei Rule: (1) adding 38 Huawei entities to the Entity List; (2) replacing the Huawei TGL with a narrow, permanent authorization; and (3) expanding the Huawei-specific DPR. While not published until the 21st, the entity list had an effective date of 5/16/2019. Aug.21.2020. Secure .gov websites use HTTPS On May 16, 2019, BIS added Huawei and 68 affiliates to the Entity List, creating a license requirement for all items subject to the Export Administration Regulations (“EAR”). BIS designated Huawei and its affiliates on the Entity List in May 2019. Amendments to the Direct Product Rule. This is a list of certain foreign persons (including companies and individuals) that are subject to license requirements for export, re-export or transfer of specific items. Share sensitive information only on official, secure websites.. The US Commerce Department’s Bureau of Industry and Security published a final rule in the Federal Register adding 77 entities and individuals to the Entity List, including several prominent Chinese multinationals. The authorization excludes only the following exports, reexports, and transfers from the Entity List licensing requirements, instead applying the standard licensing requirements of the EAR: any exports, reexports, or transfers to Huawei and its listed affiliates for "cybersecurity research and vulnerability disclosure" when the disclosure to the Huawei entity is limited to "information regarding security vulnerabilities in items owned, possessed, or controlled by [Huawei or its non-US affiliates]" that is "related to the process of providing ongoing security research critical to maintaining the integrity and reliability of existing and currently 'fully operational network[s]' and equipment."8. [1] However, Huawei has continued to use U.S. software and technology to design semiconductors, undermining the national security and foreign policy purposes of the Entity … On the same day, BIS also published FAQs … © 2020 White & Case LLP, BIS Issues Rules on the Scope of Entity List Restrictions and Significantly Limits Activities Involving Huawei. BIS is amending its longstanding foreign-produced direct product rule and the Entity List to narrowly and strategically target Huawei’s acquisition of semiconductors that are the direct product of certain U.S. software and technology. BIS designated Huawei and 68 of its non-U.S. affiliates on the Entity List in May 2019. In addition, BIS added another 38 Huawei affiliates to the Entity List, which imposes a license requirement … 14 Amendments to General Prohibition Three (Foreign-Produced Direct Product Rule) and the Entity List, 85 Fed. The term 'third party' refers to a party that is not Huawei, one of its listed non-US affiliates, or the exporter, reexporter, or transferor, but rather an organization such as a telecommunications service provider." 4 to 15 C.F.R. The Bureau of Industry and Security (BIS) of the U.S. Department of Commerce has added Huawei Technologies Co. Ltd. and its affiliates to the Bureau’s Entity List, a move Washington warned was coming on Wednesday. The rule, issued by the U.S. Department of Commerce, Bureau of Industry and Security (BIS) adds Huawei Technologies Co., Ltd. (Huawei) and 68 of its affiliates to the Entity List. Since 2019 when BIS added Huawei Technologies and 114 of its overseas-related affiliates to the Entity List, companies wishing to export U.S. items were required to obtain a license. 744, Supplement 6, available here. 1 The designation imposes an export license requirement on all exports, reexports, and transfers of items subject to the US Export … BIS added another 46 non-U.S. affiliates of Huawei in 25 countries to the Entity List. This savings clause does not apply to items that were not so "en route" on August 17, 2020. BIS addresses the question of authorization for participation in standards organizations via a June 18, 2020 interim final rule.11. This "limited permanent authorization" applies the same criteria as paragraph (c)(3) (Cybersecurity research and vulnerability disclosure) of the expired TGL. 1. In May of 2019, the US Department of Commerce’s Bureau of Industry and Security (“BIS”) added Chinese telecommunications giant Huawei Technologies Co. Ltd. (“Huawei”) and sixty-eight of its affiliated companies to BIS’s Entity List. This final rule also adds the following sixty-eight non-U.S. affiliates of the entry above to the Entity List: Belgium (1) Huawei Technologies Research & Development Belgium NV, Belgium. 744. Background and Purpose of the Entity List. Effective 16 May 2019, the United States (US) Department of Commerce, Bureau of Industry and Security (BIS) issued a Final Rule announcing the addition of Huawei Technologies Co Ltd. (Huawei) and 68 of its non-US affiliates to the Entity List for activities contrary to the security interests of the US.1 Export or re-export transactions subject to the … 51596 (August 17, 2020), available here. Notable entities on the Entity List include Huawei, a … Shipments of items removed from eligibility for a license exception or from export, reexport, or transfer (in-country) without a license as a result of the Entity List additions that were en route aboard a carrier to a port of export, reexport, or transfer (in-country) on August 17, 2020 pursuant to actual orders for export or reexport to a foreign destination, may proceed to that destination under the previous eligibility for a license exception or export, reexport, or transfer without a license. Both rules are effective immediately. Effective May 16, 2019, the US Commerce Department’s Bureau of Industry and Security (BIS) added Huawei Technologies Co. Ltd. – the largest telecommunications equipment provider in the world – and 68 of its non-US affiliates (collectively, Huawei) to the Bureau’s Entity List.As a result of this action, US and non-US exports or transfers of US goods, software, or … In the August 17 action, BIS revised the Entity List's Footnote 1, significantly expanding the scope of non-US made items (foreign-produced items) subject to General Prohibition 3 (the Direct Product Rule, at EAR section 736.2(b)(3)(vi)) for certain Entity List parties marked with a Footnote 1 designation in the Entity List's license requirement column (a Footnote 1 entity). This designation means that licenses are required for all exports and re-exports to Huawei of U.S.-origin goods, including “EAR99” items that are not identified on the Commerce Department’s … Today, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) has published a Temporary General License for specific, limited engagement in transactions with Huawei Technologies Co., Ltd. and its sixty-eight non-U.S. affiliates which were added to the BIS Entity List effective May 16, 2019. The U.S. Commerce Department has added 46 additional overseas affiliates of Chinese telecommunications technology manufacturer Huawei Technologies Co. Ltd. to the restrictive Entity List.. Some aspects of the rule are subject to a “savings clause” or delay in application of the new restrictions. "4 The Commerce press release further noted that the clarification of Entity List requirements announced in the August 17 Entity List Rule also target Huawei "when any of the Huawei entities on the Entity List are a party to the transaction, such as by acting as purchaser, intermediate consignee, ultimate consignee, or end user. If the detailed scenarios apply, exports to Huawei by companies in Europe and Asia are subject to license requirements. Such foreign-produced items will only require a license when there is knowledge that they are destined for reexport, export from abroad, or transfer (in-country) to Huawei or any of its affiliates on the Entity List. Just days after the US authorities added Huawei to the Entity List, the Bureau of Industry and Security (BIS) released a Temporary General License (TGL). The Federal Register notice filed by the Department of Commerce’s Bureau of Industry and Security (BIS) to be published on Tuesday, May 21, 2019, indicates that the U.S. government has added Huawei and 68 of its non-U.S. affiliates to the Entity List because BIS has found that “there is reasonable cause to believe that Huawei Technologies Co., Ltd. (Huawei) … According to Chinese media reports, a total of 260 Chinese entities are on the Entity List. The August 17 Huawei Rule allows the previous Huawei-related TGL to expire, replacing it with a narrower, permanent authorization. As per the sources, the US government is aiming to add around 80 additional companies and affiliates to the ‘Entity List,’ which mostly comprises of China based firms. BIS confirmed that the listing of an entity on the Entity List does not impose limitations on payments between parties. We must amend our rules exploited by Huawei and HiSilicon and prevent U.S. technologies from enabling malign activities contrary to U.S. national security and foreign policy interests.”. Reg. 744.11(a); "Purchaser," "intermediate consignee," "ultimate consignee," and "end-user" are defined terms in section 748.5(c)-(f) and part 772 of the EAR. BIS first published the Entity List in February 1997 as part of its efforts to inform the public of entities who have engaged in activities that could result in an increased risk of the diversion of exported, reexported and transferred (in … 7 On May 16, 2019, BIS added Huawei and 68 of its non-US affiliates to the Entity List. § 772.1. The license is intended to allow Huawei … I In August 2019, an additional 46 non-U.S. affiliates of Huawei were designated on the Entity List. A lock ( US – BIS adds Chinese multinationals to the Entity List and publishes FAQs about the Huawei FPDP rule. Entity List (if BIS were to update its Entity List designation to expand the … Entity List … 46 Huawei entities, BIS added 27 as new, separate entries on the Entity List; the remaining 19 entities were added under the existing entry for Huawei. Also on December 18, BIS posted new Frequently Asked Questions ("FAQs") related to BIS's prior designation on the Entity List of Huawei Technologies Co., … “Huawei is … The expired TGL—amended several times—authorized the use of the pre-Entity List licensing requirements and policies that applied to exports, reexports, and transfers of items related to four categories of activities to Huawei and its listed affiliates.9 The TGL originally authorized four categories of transactions: (1) continued operation of existing networks and equipment; (2) support to existing handsets; (3) cybersecurity research and vulnerability disclosure; and (4) engagement as necessary for development of 5G standards by a duly recognized standards body. There are now well over 150 Huawei entities on the List for which the export, re-export, or transfer of items subject to the EAR (including items subject to the new FDP restrictions) are prohibited, absent a license. Reg. Addition of 38 Non-US Huawei Affiliates to Entity List. US - BIS adds Chinese multinationals to the Entity List and publishes FAQs about the Huawei FPDP rule Blog Global Compliance News. Moreover, license exceptions otherwise available under the EAR are suspended with respect to Huawei and BIS Reg. This information included the activities alleged in the Department of Justice’s public Superseding Indictment of Huawei, including alleged violations of the International Emergency Economic Powers Act (IEEPA), conspiracy to violate IEEPA by providing prohibited financial services to Iran, and obstruction of justice in connection with the investigation of those alleged violations of U.S. sanctions. 15 C.F.R. Consequences of noncompliance can be severe, including significant monetary penalties and in some cases denial of export privileges. Reg. BIS added another 46 non-U.S. affiliates of Huawei in 25 countries to the Entity List. BIS has now issued a final rule that also applies this control to transactions where (1) U.S. software or technology is the basis for a foreign-produced item that will be incorporated into, or will be used in the production or development of, any part, component, or equipment produced, purchased, or ordered by any Huawei entity on the Entity List; or (2) any Huawei entity on the Entity List … 5 See 15 C.F.R. This savings clause does not apply to items that were not so "en route" on August 17, 2020. On August 19, 2020, BIS added an additional 46 non-US affiliates. Entities on the Entity List. The Entity List (Supplement No. The Entity List restrictions apply only to the export, reexport, or transfer of items to designated Huawei entities, but do not preclude the entry into contracts or other commercial dealings with those entities. This TGL can be used for trade with Huawei (and/or listed, affiliated companies) by businesses in Europe and … This announcement cuts off Huawei’s efforts to undermine U.S. export controls. Since 2019 when BIS added Huawei Technologies and 114 of its overseas-related affiliates to the Entity List, companies wishing to export U.S. items were required to obtain a license. BIS Adds Chinese Multinationals to the Entity List and ... (the “Huawei FPDP Rule”). The restrictions as a result of being placed on the Entity List mean that Huawei will lose access to critical products and services from these companies. See our previous client alert, available here. Amendments to the Direct Product Rule. Federal Register notice of the interim final rule is available here. The direct product of software or technology produced or developed by a Footnote 1 entity and was produced by a plant or major component of a plant located outside of the United States that is itself the direct product of US-origin technology or software classified under the ECCNs listed above. As a result of these Entity List designations, no supplier – US or non-US, wherever located – may export, reexport, or transfer (in country) any commodity, software, or technology (“items”) subject to the Export Administration Regulations (“EAR”) to a Designee or where a Designee is a purchaser, intermediate consignee, ultimate consignee or end-user, unless licensed by BIS. In doing so, BIS decided to preserve the TGL’s cybersecurity research and vulnerability disclosure authorization, and implemented that decision by adding a new footnote 2 to the Entity List, and revising the Huawei-related Entity List entries to refer to that new footnote. The US Department of Commerce has added Huawei to the country’s Entity List, ... (BIS) added a further 38 non-US affiliates of Huawei from 21 countries, including the UK, UAE, Germany, Switzerland, France, Egypt, India and Singapore, to prevent the company from bypassing its latest block via third parties. Specifically, the August 17 Huawei Rule amends Footnote 1 to prohibit the export, reexport, or transfer to any party (not just Footnote 1 entities) without a license or license exception of the following foreign-produced items: Previously, on May 19, 2020 (effective May 15), BIS issued an interim final rule setting out an earlier Huawei-specific DPR that captured a narrower set of foreign-produced items.14 The May 19 Huawei-specific DPR applied to the export, reexport, or transfer of foreign-produced items where there was "knowledge" that the item was destined to any Footnote 1 entity and the item was either: As of August 17, this previous Huawei-specific DPR is superseded by the new Huawei-specific DPR. The clarification of what transactions are covered by Entity List licensing requirements in the August 17 Entity List Rule affects export, reexport, and transfer transactions to which any entity listed on the Entity List is a party. 51335 (August 17, 2020), available here. Soon after the executive order - "Securing the Information and Communications Technology and Services Supply Chain" - was signed, the Bureau of Industry and Security (BIS) of the Department of Commerce announced that it will be adding Huawei Technologies Co. Ltd and its affiliates to its Entity List. Companies engaging in export, reexport, or transfer transactions involving Huawei or its non-US affiliates listed on the Entity List, as well as to other entities on the Entity List, should closely study the changes made by the August 17 rules and should monitor BIS' implementation of these new rules. The new rule expands the jurisdictional scope of the EAR and restricts the non-US supply of semiconductor chips to Huawei Technologies and its affiliates on the Commerce Department Entity List (Supplement No. On May 16, 2019, the US Commerce Department’s Bureau of Industry and Security (BIS… Download (pdf, 311 KB) 84 FR 22961 Huawei and Affiliates Entity List rule_effective 5-16-19_published in FR 5-21-19.pdf 4 The United States Further Restricts Huawei Access to US Technology (August 17, 2020), available here. The Entity List, which is enforced by the Commerce Department’s Bureau of Industry and Security (BIS), identifies entities believed to be involved in activities that pose a threat to … The Bureau of Industry and Security (BIS) in the Department of Commerce (Commerce) today further restricted access by Huawei Technologies (Huawei) and its non-U.S. affiliates on the Entity List to items produced domestically and abroad from U.S. technology and software. 36719 (June 18, 2020), available here. Strengthen U.S. economic and national security, Fulfill constitutional requirements and support economic activity, Deliver customer-centric service excellence, Bureau of Economic Analysis (BEA) Guidance, Bureau of Industry and Security (BIS) Guidance, Economic Development Agency (EDA) Guidance, International Trade Administration (ITA) Guidance, Minority Business Development Agency (MBDA) Guidance, National Institute of Standards and Technology (NIST) Guidance, National Oceanic and Atmospheric Administration (NOAA) Guidance, National Telecommunications and Information Administration (NTIA) Guidance, U.S. Patent and Trademark Office (USPTO) Guidance, Commerce Addresses Huawei’s Efforts to Undermine Entity List, Restricts Products Designed and Produced with U.S. Technologies. BIS also extended the temporary general license (TGL) that authorizes certain activities subject to the EAR involving Huawei and its affiliates through August 13, 2020. 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