On October 28, 2022, the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) issued the first FAQs for the Advanced Computing and Semiconductor Manufacturing Interim Final Rule, published October 13, 2022. (87 Fed. Reg. 62,186) (the “Regulations”) and amendments to the Export Administration Regulations (“EAR”). You can get the FAQ here and the rules here. A blog post related to rules can be found here.
The FAQ addresses specific questions such as: (i) Geographic Scope of the Regulations. (ii) Definition of “Facilities” under the Regulations. (iii) Impact on Regulated Deemed Exports and Reexports. (iv) Defined and controlled activities of a United States Person under § 744.6(c) in connection with the Regulations. (v) License Review Policy for Licenses and Regulations. (vi) Rule impact on end items with encryption capabilities classified under new ECCNs 3A090 and 4A090.
The FAQ clarifies that the new restrictions on exports and re-exports to China also apply to Hong Kong. However, BIS treats Macau as a separate destination from China, so the new restrictions do not apply to Macau. Macau is therefore not subject to the same licensing requirements specific to China. Nonetheless, BIS encourages exporters and re-exporters to exercise due diligence and heed the red flags when shipping to Macau.
Meaning of “facility”
The FAQ indicates that exporters and reexporters may rely on the definition of “facility” under § 772.1 of the EAR. Therefore, a semiconductor manufacturing “facility” Limited technology level production will occurHowever, the regulations do not cover subsequent steps at the facility (for exampleassembly, testing and/or packaging) No Change tech level.
BIS also clarified that under §772.1 of the EAR, the definition of “facility” is considered at the “building” level.So if the building/facility contains both restricted production lines When unlimited production lines, whole The building/facility is subject to regulation. Exporters and re-exporters should exercise due diligence and heed the red flags when shipping to unrestricted buildings located on premises that also have restricted buildings on the same campus.
Effects of deemed exports and reexports
New Regional Security (“RS”) Controls (“RS”) Controls Applicable to China for Advanced Computing and Semiconductor Manufacturing Items (look EAR § 742.6) does not apply to deemed exports or reexports. The BIS FAQ reminds businesses that all relevant new ECCNs and related technology/software regulations are regulated for Anti-Terrorism (“AT”) reasons. Considered for export to nationals of Cuba, Iran, North Korea, and Syria. )
BIS reiterated its position that foreign nationals who lawfully received source code for newly controlled technology or software prior to the effective date of the rule do not require new licenses or authorizations. However, if the alien receives controlled technology or software from her source code that differs from the material the alien legally received, even if classified under the same ECCN, the alien will be subject to post-approval. Is required.
activities of Americans
With regard to the new “notified” regulations for the activities of U.S. Persons in §744.6(c)(2) of the EAR, BIS has clarified that such regulations do not extend to the activities of all U.S. Persons. BIS has advised that these restrictions do not apply to U.S. persons performing administrative or administrative activities (for examplearrangements for shipment or preparation of financial documents), or limited shipments, transmissions, or domestic transfers not directly related to the provision or service of the specified item, or decisions to authorize “development” or “production” activities. There is no evidence of knowledge of violations by those persons in respect of the advanced manufacturing facilities in China that carry them out.
License and License Review Policy
BIS will allow previously issued licenses for items currently seized under one of the new ECCNs to suspend, revoke, or impose additional conditions on previously issued licenses. Clarified that it will remain in effect until its expiration date unless there is a specific BIS measure. Businesses granted BIS authorization to continue to operate in China for a limited period of time should request their suppliers and customers to do so to jointly determine whether a potential transaction meets the conditions for authorization. A copy of the authorization must be provided.
Impact on end items with encryption capabilities
Under the new rule, ECCN 5A992 and 5D992 items that meet or exceed the parameters of ECCN 3A090 or 4A090 are subject to the licensing requirements and review policy of ECCNs 3A090 and 4A090 under § 742.6(a)(9) of the EAR. becomes. These items are also subject to the restrictions and requirements of Category 5, Part 2 of the Commerce Control List to Supplement No. 1 to Part 774 of the EAR. In addition, License Exception ENC provides protection for computers, integrated circuits, “electronic assemblies”, or “components” not specified in §740.2.(a)(9)(i) of the EAR that meet or exceed the parameters of ECCN 3A090. does not apply. or 4A090.
The authors would like to thank Rob O’Brien for contributing to this blog post.