On September 9, 2022, the Department of Commerce's Bureau of Industry and Security (BIS) published an interim final rule in the Federal Register that clarifies the license requirements needed for U.S. companies to release low-level technology in order to participate in international standards-setting activities.
Background
The rule was issued in response to concerns regarding Huawei Technology's participation in international standards-setting organizations.1 Huawei and a number of its non-U.S. affiliates have been on BIS's Entity List since May 2019.2 The Entity List imposes licensing requirements under the Export Administration Regulations ("EAR") for the export, reexport, and transfer (in-country) of most items subject to the EAR to listed entities. Items subject to the EAR include U.S.-origin items, items with a certain threshold of U.S. content, and information necessary for the "development," "production," "use" operation, installation, maintenance, repair, overhaul, or refurbishing of an item.3
As Huawei and its affiliates expanded their participation in international standards-setting bodies, U.S. companies expressed concern that the release of software or technology at standard-setting bodies in which Huawei companies has involvement would inadvertently violate export control laws. In response, BIS issued a series of temporary general licenses and limited authorizations to allow U.S. companies to participate in international standards-setting bodies under certain circumstances.4 This interim final rule is intended to provide further clarity on the scope of permissible standards activities covered by the authorization.
In announcing the rule, Under Secretary of Commerce for Industry and Security Alan Estevez said, "U.S. stakeholders need to be fully engaged in international standards organizations, particularly where the critical but sometimes invisible standards that they set have important national security as well as commercial implications," recognizing the importance of having a rule in place to protect U.S. participation in international standards-setting activity.5
Modifications to the EAR
This rule modifies § 744.11 and § 744.16 of the EAR to provide an exclusion from licensing requirements that would otherwise apply as a result of the Entity List designation under certain circumstances:
- The technology or software is either: (i) classified as EAR99, controlled only for anti-terrorism (AT) reasons; or (ii), classified under one of a few specifically enumerated classifications when released specifically for the "development," "production," and "use" of cryptographic functionality;
- The "release" of technology or software must be made in the context of a "standards-related activity;" and
- There is an intent to "publish" the resulting standard.6
The rule also modifies § 772.1 of the EAR to define "standards-related activity," which includes the development, adoption, or application of any standard, with the intent that the resulting standard will be "published" in a written form for repeated reference or use.7
The rule came into effect on its date of publication, September 9, 2022. Interested parties may still comment on the scope and effectiveness of the rule. These comments must be submitted no later than November 8, 2022.8
Footnotes
1 87 Fed. Reg. 55241; https://www.bis.doc.gov/index.php/documents/about-bis/newsroom/press-releases/3127-2022-09-08-bis-press-release-standards-rule/file.
2 84 Fed. Reg. 22961 (May 21, 2019), https://www.federalregister.gov/documents/2019/05/21/2019-10616/addition-of-entities-to-the-entity-list.
3 https://bis.doc.gov/index.php/policy-guidance/deemed-exports/deemed-exports-faqs/faq/33-what-is-technology; https://www.bis.doc.gov/index.php/documents/regulations-docs/2382-part-734-scope-of-the-export-administration-regulations-1/file#:~:text=(1) %E2%80%9CSubject to the,not affected by these regulations.
4 87 Fed. Reg. 55241, 55241-55242.
5 https://www.bis.doc.gov/index.php/documents/about-bis/newsroom/press-releases/3127-2022-09-08-bis-press-release-standards-rule/file.
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