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American ShipperNewsRegulationRisk & ComplianceTrade Compliance

BIS advisory cautions tech firms in standards-setting bodies

The Commerce Department agency in charge of enforcing U.S. export controls warns that certain exchanges of technology information in standard-setting organizations might run afoul of the Entity List.

The Commerce Department’s Bureau of Industry and Security has provided a general advisory opinion warning U.S. exporters to use caution when sharing certain technology information in global standards-setting organizations if parties on the Entity List are involved. 

The agency said it released the advisory opinion after receiving numerous requests from the industry for this clarification in response to the 90-day temporary general license (TGL) from May 20 involving Chinese telecom Huawei Technologies Co. Ltd. and 68 of its overseas affiliates and subsidiaries that were placed on the Entity List.

The Commerce Department added Huawei Technologies and its 68 overseas affiliates and subsidies to the Entity List on May 16 in response to a decision by the federal government’s End-User Review Committee (ERC), which determined that the Chinese company posed a threat to U.S. national security and foreign policy.

The temporary general license, which was subsequently extended another 90 days on Aug. 19, allows U.S. exporters who meet certain regulatory conditions the ability to continue conducting business with Huawei Technologies and its 68 affiliates on the Entity List.

Conditions for “authorized transactions” under the temporary general order include continued operation of existing networks and equipment, support to handsets acquired before May 16, cybersecurity research and vulnerability disclosure, and “engagement as necessary for development of 5G standards by a duly recognized standards body.” 

However, many questions arose regarding allowable exchanges of technical information through standards setting and development organization meetings, position papers and presentations if and when Huawei entities on the Entity List are involved.

“Regardless of whether such exchanges occur within a standards body designated or characterized as an organization that developments international standards, a consortium or some other designation, a variety of activities in the standards setting or development context are prohibited absent a license or other authorization from BIS if any of the listed Huawei entities (or another listed entity) is involved,” the agency said. 

A concern among U.S. and foreign information technology providers is being precluded from participating in standards-setting organizations, particularly as it relates to the development of 5G telecommunication technology, due to the U.S. export licensing requirements invoked by Huawei’s expansive presence on the Entity List. 

Kevin Wolf, a partner with international trade law firm Akin Gump, said most releases of technology that occur during international standards organization activities are “clearly published” as defined by section 734.7 of the Export Administration Regulations (EAR).

“With a solid understanding of the facts and advice of counsel regarding the scope of EAR section 734.7, participants can get confidence that most standards activities are not affected by the Entity List prohibitions,” he said. 

However, he said the BIS advisory opinion was not as thorough as many U.S. and foreign technology companies had expected.

“Many standards organization participants were hoping for guidance from BIS regarding when it would consider some less clear situations to still be ‘published’ and thus not subject to the EAR,” said Wolf, who served as assistant secretary of commerce for export administration in BIS from 2010 to 2017. “BIS responded, however, by providing in an advisory opinion with examples of prohibited activities and removing the general license authorizing releases to representatives of the recently listed entities of technology subject to the EAR during international 5G standards meetings.”

A corporate compliance officer who agreed to discuss the BIS advisory opinion on background said, “Some standards bodies operate in the public domain while others do not. I think BIS is stating that any standards development activity that is not widely and freely available to the public must also be eligible for the TGL before sharing the information at a standards-setting forum if Huawei is involved.”

Paul DiVecchio, a 40-year, Boston-based export compliance consultant, nonetheless praised BIS for its “attempt to demonstrate transparency of regulation interpretations” in the advisory opinion. 

“In my view, the examples cited in the general advisory opinion set a precedent for other parties identified on the Entity List that would be impacted by similar circumstances related to software or technology transfers,” he said.

Meanwhile, the U.S. government continues to turn up the pressure on Huawei. On Aug. 19, the Commerce Department announced that it has added another 46 Huawei entities to the Entity List.

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Chris Gillis

Located in the Washington, D.C. area, Chris Gillis primarily reports on regulatory and legislative topics that impact cross-border trade. He joined American Shipper in 1994, shortly after graduating from Mount St. Mary’s College in Emmitsburg, Md., with a degree in international business and economics.

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