The U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) announced on June 15, 2020 that it is issuing a new rule to allow persons to share certain U.S. technology with Huawei Technologies Co., Ltd. (“Huawei”) in connection with standards development in a standards setting body, despite Huawei’s designation to the Entity List. Commerce stated that this action is aimed at “ensuring U.S. industry’s ability to more fully contribute to standards-development activities in the telecommunications sector.” This comes after other restrictions targeting Huawei were implemented in May 2020, as discussed in a previous Trump and Trade bulletin and post. The new rule has not yet been published in the Federal Register, so the effective date is not known at this time.
Previously, the temporary general license (“TGL”) issued at the time of Huawei’s designation to the Entity List in May 2019, included paragraph (c)(4) allowing engagement as necessary for the development of 5G standards by a duly recognized standards body. However, this authorization was removed in the August 2019 extension of the TGL, according to BIS guidance, based on the determination that existing provisions of the Export Administration Regulations (“EAR”) sufficed for activities in connection with standards development bodies, including 5G standards bodies. A related general advisory opinion was also issued in August 2019, Concerning Prohibited Activities in the Standards. With the June 15 announced rule, BIS is changing course. The announcement states that the August 2019 advisory opinion is no longer in effect.
The June 15 announcement provides that under the new rule, companies may disclose technology to Huawei without an export license if it: (1) would not have required a license to be disclosed to Huawei before its placement on the Entity List; and (2) will be disclosed for the purpose of standards development in a standards-development body, not for commercial purposes. Specifically, the announcement states that the new rule will authorize the release of U.S. technology designated as EAR99 or controlled only for Anti-Terrorism reasons on the Commerce Control List without a license, in the context of “voluntary consensus standards bodies” of which Huawei is a participant, for the purpose of contributing to the revision or development of a “standard,” as defined in Office of Management and Budget Circular A-119 (Rev. 2016). However, disclosure of technology to Huawei for commercial purposes will remain subject to all applicable EAR requirements.
According to Commerce Secretary Wilbur Ross, “This action recognizes the importance of harnessing American ingenuity to advance and protect our economic and national security. The Department is committed to protecting U.S. national security and foreign policy interests by encouraging U.S. industry to fully engage and advocate for U.S. technologies to become international standards.”