Effective May 20, 2019, the US Commerce Department’s Bureau of Industry and Security (“BIS”) issued a final rule creating a 90-day Temporary General License (“TGL”) authorizing certain transactions involving the export, reexport, and transfer of items subject to the Export Administration Regulations (“EAR”) to Chinese-headquartered Huawei Technologies Co. Ltd. (“Huawei”) and its sixty-eight non-US affiliates, which were added to the BIS Entity List effective May 16, 2019 (the “Entity List designation”). The TGL will be effective through August 19, 2019. Please see our prior blog post here for more information on the Entity List designation.
The Entity List designation prohibits both US and non-US companies, wherever located, from exporting, reexporting, or transferring (in country) any commodity, software, or technology (“items”) subject to the EAR to the sixty-nine designated Huawei entities unless authorized by a BIS license. License applications for such transactions are subject to a presumption of denial, and no EAR license exceptions are currently available for exports/reexports/transfers of items subject to the EAR to the designated Huawei entities.
The TGL mitigates the impact of the Entity List designation by partially restoring to the EAR licensing requirements for transactions with Huawei and its designated affiliates that were in place prior to the Entity List designation. In other words, the TGL is not a blanket authorization. Rather, certain transactions with Huawei and its designated affiliates are subject to pre-designation, pre-May 16 controls under the EAR, e.g., licensing requirements to the country of destination.
The following transactions are covered by the TGL:
- Transactions subject to legally binding contracts and agreements executed on or before May 16, 2019, between Huawei and third parties, or designated affiliates of Huawei and third parties, that are necessary to maintain and support Huawei’s existing and currently fully operational networks and equipment, including software updates and patches;
- Transactions necessary to provide service and support, including software updates or patches, to existing Huawei handsets that were available to the public on or before May 16, 2019;
- Disclosure to Huawei and/or its designated affiliates of information regarding security vulnerabilities in items owned, possessed, or controlled by Huawei or any of its designated affiliates when related to the process of providing ongoing security research critical to maintaining the integrity and reliability of existing and currently fully operational networks and equipment, as well as handsets; and
- Engagement with Huawei and/or its designated affiliates as necessary for the development of 5G standards as part of a duly recognized international standards body.
Prior to engaging in any authorized transactions described above, the exporter, reexporter, or transferor is required to make a certification statement specifying how the transaction meets the scope of the TGL. The exporter, reexporter, or transferor that drafted the statement is responsible for retaining the certification statement for recordkeeping purposes.
BIS has indicated that it will be issuing FAQs on the Entity List designation and the TGL in the coming days.