Government Contracts Interim EAR Rule Amends General Prohibition Three
Tuesday, June 16, 2020

Interim EAR Rule Amends General Prohibition Three

By Government Contracts Editorial Staff

An interim final rule issued by the Bureau of Industry and Security amends the Export Administration Regulations. The rule amends General Prohibition Three (EAR 736.2(b)), also known as the foreign-produced direct product rule, to impose a new control over certain foreign-produced items when there is knowledge the items are destined to a designated entity on the Entity List (Supplement No. 4 to EAR Part 744). The new control at EAR 736.2(b)(3)(vi) applies to foreign-produced items based on the reason for control or classification of the U.S. “technology” or “software.” This rule adds a footnote 1 to the Entity List, and a foreign-produced item is subject to the new control if the entity for which the item is destined has a footnote 1 designation. The rule notes that the new control applies to Huawei Technologies Co., Ltd., and its 114 non-U.S. affiliates listed on the Entity List. BIS issued the rule to promote U.S. national security and foreign policy interests. The effective date of the rule is May 15, 2020, and comments are due July 14, 2020. See ¶72,750.476 for the text of the rule.

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