As trade compliance professionals, many of us are just trying to keep our head above water with the changing compliance scene. There is no longer a status quo within the regulations as the compliance boundaries are shifting on a daily basis.
Such is the case with the announcement on June 15, 2020 from the Department of Commerce stating that they are issuing an interim final rule “that will allow persons to share certain U.S. technology with Huawei Technology Co. Ltd, in connection with standards development in a standard setting body (organization).” Huawei is a participant in this standard setting body and has been for many years.
By definition, a standard setting body is an “organization whose primary tasks are developing, coordinating, disseminating, revising, amending, reissuing, interpreting, or otherwise maintain standards that address the interests of a wide base of users, outside of the standard setting organization, anywhere in the world.”
While committed to protecting national security and foreign policy interests, it is clear from this announcement that the federal government has heard the concerns of the telecommunications sector and it’s fear that, after the removal of the authorization in the BIS Temporary General License issued in August 2019, the U.S. would lag behind in the development of the 5G standards not only for domestic use, but also in its technological contributions to the standards worldwide.
Under the new rule, an export license approval from BIS will not be necessary to disclose technology to Huawei Technologies Co. Ltd. and one hundred fourteen (114) of its foreign affiliates currently identified on the Entity List if the following requirements are met:
- The release is made for the purpose of contributing to the revision or development of a “standard” in a “standards organization,” as defined in the Office of Management and Budget (“OMB”) Circular A-119 noted in the Federal Register release of January 27, 2016.
- The technology is designated as EAR99, or is controlled on the Commerce Control List (“CCL”) for anti-terrorism (“AT”) reasons only.
- Technology controlled for national security (“NS”) and other reasons for control are not authorized under this rule, (i.e. encryption technology controlled in ECCN 5E002).
- Researchers and developers will not be committing an export violation as long as the information is released at a ‘standards bodies meeting or as part of a contribution to a technical standard, as long as the information being released is either EAR99 or only restricted under “AT” controls.
- The technology is only released to members of the “standards organization,” and not for commercial use.
- Technology for commercial purposes will remain subject to all other EAR requirements.
Lastly, BIS will be cancelling, as well as removing from its website, the advisory opinion entitled “General Advisory Opinion Concerning Prohibited Activities in the Standards Setting or Development Context When a Listed Entity is Involved.”
The new rule was published in the Federal Register on June 18, 2020 and the compliance community will have sixty (60) days from the date of publication in the Federal Register to submit comments or concerns to BIS.
For assistance in navigating all of the recent changes, please contact Export Solutions for a free consultation.
Beverly Demma is a Sr. Consultant for Export Solutions -- a full-service consulting firm specializing in U.S. import and export regulations.