BIS Allows U.S. Companies to Work with Huawei on Standards
The U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) published a notice in the Federal Register announcing a rule change effective June 18, 2020, which amends the Export Administration Regulations (“EAR”) to allow for the release of certain technology to Huawei Technologies, Co., Ltd. and 114 of its non-U.S. affiliates designated on the Entity List without a license “if such release is made for the purpose of contributing to the revision or development of a ‘standard’ in a ‘standards organization.’”
Despite being added to the Entity List by BIS in 2019, Huawei and its foreign affiliates still participate in several international standards organizations in which U.S. companies also participate. BIS states in its notice “[a]s international standards serve as the building blocks for product development and help ensure functionality, interoperability, and safety of the products, it is important to U.S. technological leadership that U.S. companies be able to work in these bodies in order to ensure that U.S. standards proposals are fully considered.”
As a result of Huawei’s entity list designation, BIS has received questions regarding the applicability of the EAR in the context of standards-setting or development. On August 19, 2019, BIS issued a “General Advisory Opinion Concerning Prohibited Activities in the Standards Setting or Development Context When a Listed Entity is Involved”, which addressed the applicability of certain types of releases. With the issuance of this new interim final rule, that previous guidance has been rescinded.
The new rule removes certain licensing requirements imposed by the original listing and removes the need to determine the application of controls to those releases. The interim final rule revises ninety-three entries, which list Huawei and its 114 foreign affiliates by changing the text in the Licensing Requirement column from “For all items subject to the EAR (See §744.11 of the EAR)” to “For all items subject to the EAR (see § 744.11 of the EAR), EXCEPT for technology subject to the EAR that is designated as EAR99, or controlled on the Commerce Control List for anti-terrorism reasons only, when released to members of a ‘‘standards organization’’ (see § 772.1) for the purpose of contributing to the revision or development of a ‘‘standard’’ (see § 772.1).’’
According to the notice, the definition of a “standard” for the purpose of this rule can be found in the Office of Management and Budget (“OMB”) Circular A-119. BIS welcomes comments from interested parties on the impact of the rule change on or before August 17, 2020.
Grant Leach is an Omaha-based partner with the law firm Husch Blackwell LLP focusing on international trade, export controls, trade sanctions and anti-corruption compliance.
Camron Greer is an Assistant Trade Analyst in Husch Blackwell LLP’s Washington D.C. office.