On November 10, 2025, the US Department of Commerce’s Bureau of Industry and Security (“BIS”) formally suspended the implementation of the “Affiliates Rule” for one year, as published in the Federal Register (linked here) on November 12, 2025. This suspension follows high-level trade negotiations between the United States and China, culminating in reciprocal concessions announced in late October and early November as discussed on our blog here and here.
Background on the Affiliates Rule
Originally effective September 29, 2025, the Affiliates Rule significantly expanded the scope of US export controls under the Export Administration Regulations (“EAR”). The rule extended EAR restrictions to entities that are at least 50% owned—directly or indirectly, individually or in the aggregate—by one or more parties identified on the BIS Entity List, the Military End-User List, or designated under certain Office of Foreign Assets Control (“OFAC”) sanctions programs.
Under the rule, such affiliates would be subject to the same licensing requirements, license review policies, and license exception availability as their listed parent entities. This aligned BIS’s approach more closely with OFAC’s “50% Rule“, though the BIS Affiliates Rule was more expansive than the OFAC 50% Rule in that it considered all relevant shareholder licensing requirements and applied whichever was most restrictive. Our previous blog post on the introduction of the Affiliates Rule is here.
Details of the Suspension
The suspension is structured in two phases:
- Phase I: Effective November 10, 2025, through November 9, 2026, BIS has stayed all amendments made to the EAR by the Affiliates Rule. The Federal Register notice states that during the first phase, BIS will continue to evaluate US national security and foreign policy interests related to these non-listed foreign affiliates of listed entities.
- Phase II: Beginning November 10, 2026, the previously suspended provisions will be reinstated, absent a further extension.
The suspension is not limited to Chinese entities; it applies broadly to all designated entities regardless of location or country of affiliation.
Implications for Industry
While the Affiliates Rule is currently suspended, it has not been repealed. Moreover, the suspension is subject to the US-China Framework Agreement remaining in good standing under US government policy. Companies should treat this period as a temporary reprieve and consider taking proactive steps to prepare for its potential reinstatement:
- Review and update export compliance programs to ensure readiness for the rule’s reimplementation.
- Assess supply chains and foreign partnerships to identify entities that may fall under the scope of the Affiliates Rule.
- Map ownership structures to determine exposure to listed entities and mitigate potential enforcement risks.
- Be ready for BIS to add more parties to the Entity List in lieu of the BIS Affiliates Rule.
