United States: Reminder: Commerce Department Prohibitions Pertaining To Huawei Can Apply To Transactions By Non-U.S. Companies

Key Points

  • Since the addition of Huawei and many of its affiliates to the Entity List, there has been significant media coverage over which types of transactions involving the listed entities are, and are not, prohibited without a Commerce license. Some commentators and companies seem to be under the mistaken impression that non-U.S. companies cannot be affected by the listing merely because they are not U.S. companies or because they are working with non-U.S.-origin commodities, software, or technology. Such conclusions are not necessarily correct.
  • U.S. export controls and Entity List prohibitions focus on the origin and jurisdictional status of the commodities, software, or technology that would be transferred to the listed entity, regardless of the nationality or ownership status of the company providing them. For example, if a wholly non-U.S. carrier, app developer, or electronics manufacturer transfers to Huawei a commodity, software, or technology of any sort that is U.S.-origin or that is non-U.S.-origin and it contains more than a de minimis amount of U.S.-origin controlled content, then the commodity, software, or technology is still subject to U.S. controls and the Entity List prohibitions.
  • Violations of the Entity List prohibitions by a non-U.S. company can lead to civil or criminal penalties, or other sanctions that would affect its ability to receive U.S.-origin items. Thus, non-U.S. companies engaging in transactions involving Huawei should not assume that they are not affected by the Entity List prohibitions merely because they are outside the United States or because the products involved were manufactured outside the United States.

The Entity List and Key Definitions

The Entity List prohibitions, which are administered by the Commerce Department’s Bureau of Industry and Security (BIS), prohibit the unlicensed export of all commodities, software, and technology that are subject to the Export Administration Regulations (EAR), even low-level “EAR99” items that are not identified on any U.S. export control lists. For example, a U.S.-origin toothbrush and nonpublic U.S.-origin drawings for how to manufacture it are EAR99 items “subject to the EAR.”

Contrary to many press reports and other comments, only a limited number of transactions involving the listed Huawei companies have been authorized by a Temporary General License, which is primarily intended to minimize the impact of the listing on Huawei’s existing customers (but not its suppliers or development partners).

The EAR defines “item” as any commodity, software, or technology. A “commodity” is any article (such as a part or a component), material, or supply except technology and software. “Technology” is defined as “information necessary for the development, production, use, operation, installation, maintenance, repair, overhaul, or refurbishing” of a commodity, software, or other technologies, regardless of origin. “Software” is defined as a “collection of one or more programs or microprograms fixed in any tangible medium of expression.” Several of these words are further defined in the regulations, but the key point for non-U.S. companies to remember is that these terms are broad and do not depend upon whether the technology or software is sensitive or otherwise on an export control list.

Software and Technology “Subject to the EAR”

Software and technology are “subject to the EAR” if they are:

  • In the United States, such as on a server located in the United States;
  • U.S.-origin, such as by being developed, drawn, produced, or compiled in the United States;
  • Foreign-origin and commingled with or drawn from more than a de minimis amount of controlled U.S.-origin technology; or
  • The direct product of sensitive U.S.-origin technology or software, a complete plant built using such technology or software, or a major component of a plant built using such technology or software.

Thus, for example, nonpublic U.S.-origin technology necessary to produce a toothbrush may not be provided to Huawei by a company outside the United States without a BIS license.

De Minimis Calculations Involving Software and Technology

U.S.-origin technology does not lose its U.S.-origin status when it is redrawn, used, consulted, or otherwise commingled abroad in any respect with other technology of any other origin. Therefore, any subsequent or similar technology prepared outside the United States that is drawn from or uses any U.S.-origin technology is subject to the EAR in the same manner as the original U.S.-origin technology, including license requirements, unless the commingled technology is not subject to the EAR by reason of the de minimis exclusions described in the regulations.

The EAR also state that a party must file a one-time report with BIS prior to relying on a determination that foreign-origin technology does not contain more than a de minimis amount of controlled U.S.-origin content. The report must describe the bases for the conclusion, including a description of the calculations and the values, assumptions, and methodologies that went into making the de minimis determination.

Similarly, U.S.-origin software that is incorporated into or commingled with foreign-origin software does not lose its U.S.-origin status. It is subject to the EAR in the same manner as the original U.S.-origin software, including license requirements, unless the commingled software is not subject to the EAR by reason of the de minimis exclusions described in the regulations. One-time reports are not required for software, but reexporters must maintain records of their calculations to document qualification for the exclusion.

There are some exclusions and special requirements for de minimis calculations involving U.S.-origin encryption items. For example, U.S.-origin encryption technology classified under ECCN 5E002 is ineligible for de minimis treatment, so non-U.S.- produced encryption technology that incorporates any amount of such U.S.-origin encryption technology are subject to the EAR, regardless of the amount of U.S.-origin content. Further, certain types of encryption software must have satisfied mandatory classification or reporting procedures to qualify for the de minimis exclusion.

Foreign Direct Products

Items that are produced from U.S.-origin technology and software can be subject to the EAR, even if they are produced outside the United States. This rule applies if the U.S.-origin technology or software, and the direct product of such technology or software, are controlled for “national security” reasons and the product is destined to specific countries of concern, such as China. For example, if U.S.-origin 5D002 encryption source code is used to compile 5D002 object code outside the United States, the foreign-made object code would be subject to the EAR when exported to China.


The point of this alert is not to provide a treatise describing or legal advice about all the possible ways commodities or nonpublic technology and software outside the United States would and would not be subject to the EAR. That is a fact-specific subject to be discussed with company or outside export control compliance managers or counsel. Rather, the purpose of this alert is to remind all readers outside the United States that commodities, software, and technology are not per se excluded from the scope of the Entity List prohibitions merely because the company is foreign or the technology is not sensitive. The prohibitions are blind to the nationality of the exporter, reexporter, or transferor of the commodity, software, or technology being transferred to the listed entity. That is, they apply equally to U.S. and non-U.S. persons.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions