Not so fast: BIS Affiliates Rule paused

Ready … Set … Stop!

After being active for nearly a month, the new BIS Affiliates Rule is on “pause” until November 9, 2026. The Bureau of Industry and Security has suspended the implementation of the so-called “50% rule” for one year, starting November 10, 2025.

This suspension was part of a trade agreement with China, following negotiations between the two countries, where China also agreed to suspend its recent export controls on rare earth minerals. The Affiliates Rule would have extended export restrictions to foreign entities that are at least 50% owned by parties on lists such as the Entity List and the Military End-User List. Some analysts predicted the rule would add as many as 20,000 new Chinese entities to U.S. export restrictions. Exporters were also grappling with how to implement the new rule, with some companies offering very pricey software solutions to assist with the new screening requirements.

What should we do now?

Now that the rule has been suspended, it’s important not to return to “business as usual” while we wait to see what happens. Some experts think the rule will be revised during the next 12 months, while others speculate it’s “here to stay” and just on hold.

Whatever happens, it’s important for companies to begin adopting processes and thinking about steps to take to comply with this new rule.

Here are things you can do now to begin preparing for whatever happens next November:

• Conduct a risk assessment and have a complete understanding of your customer’s ownership.
  Request company ownership from your customers and then research on open source / publicly available information (internet) while comparing information received from customers. This means involving other parts of your company (e.g., sales) as part of the Know Your Customer requirement within the EAR.
• This is not a one and done! Screening/ownership needs to be revisited as structures can change.
• Review your customer agreements and contracts and add language or request ownership information up front.
• At a minimum, exporters should request certifications from customers pertaining to this new rule. Employees who know this customer and deal with them should then review this information and validate / determine if it is valid and credible.
  Document everything – have screenshots of screenings/internet searches. Save all research.
• The components of this new rule are very labor intensive and cannot be automated. This new rule is different from most (other than end use/military end user requirements) in that human engagement is necessary and required.

With the current implementation of this rule being suspended, it will be interesting to see how it plays out.

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