The Department of Commerce’s Bureau of Industry and Security (BIS) has issued an Interim Final Rule amending General Prohibition Three, also known as the foreign-produced direct product reexport rule, so that this General Prohibition applies to certain additional foreign-made items destined for certain persons designated with a new footnote on BIS’ Entity List. Specifically, this new rule targets Huawei Technologies Co., Ltd. and its non-U.S. affiliates listed on the Entity List and is intended to impose controls on their access to foreign-produced semiconductor chips produced outside the United States using U.S.-origin software or technology.

Key Notes:

  • Commerce amends provisions of the Export Administration Regulations to tighten “foreign-produced direct product” reexport rule.
  • Transactions involving Huawei Technologies Co., Ltd. and numerous non-U.S. affiliates will be significantly impacted as these entities’ ability to acquire semiconductors with ties to U.S. technology and software will be substantially reduced.
  • Interim Final Rule was effective as of May 15, but public comment is allowed until July 14, 2020.
  • Continued shipment of certain items already in production may continue until September 14, 2020.

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