January 24, 2021

Volume XI, Number 24

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US Needs to Participate and Lead 5G Standards-Setting; Huawei Gets a Pass

On June 18, 2020, the US Department of Commerce, Bureau of Industry and Security (BIS) published in the Federal Register, a new interim final rule that amends the Export Administration Regulations (EAR) (15 CFR Parts 730-774) by excluding from the additional licensing requirements imposed by the designations of Huawei organization on the Entity List releases of technology related to establishing standards for 5G applications. BIS states that it is revising the Entity List with this rule because of the importance of US participation and leadership in standards organizations. The new rule is effective as of publication in the Federal Register on June 18, 2020.

History of Entity List Amendments

This new interim final rule follows BIS’s previous actions whereby it added Huawei Technologies Co., Ltd. and 114 of its non-US affiliate entities to the Entity List (collectively, Huawei) (see 84 Fed. Reg. 22961 (May 21, 2019) and 84 Fed. Reg. 43493 (August 21, 2019)), and BIS’s issuance of a Temporary General License (TGL) for certain transactions with Huawei (see 84 Fed. Reg. 23468 (May 22, 2019), extended and amended by 84 Fed. Reg. 43487(August 21, 2019), and currently extended through August 13, 2020 by 85 Fed. Reg. 29610 (May 18, 2020)). BIS also posted a “General Advisory Opinion Concerning Prohibited Activities in the Standards Setting or Development Context When a Listed Entity Is Involved” to its website on August 19, 2019, which addressed the applicability of § 734.7 of the EAR to certain types of releases. BIS rescinds that advisory opinion with the publication of this new interim final rule.

How the New Rule Amends the Entity List

This new interim final rule specifically provides that technology subject to the EAR that is designated as EAR99 or controlled on the Commerce Control List (CCL) only for anti-terrorism (AT) reasons may be released to members of a standards organization without a license, including Huawei, if released for the purpose of contributing to the revision or development of a standard. Thus, this rule revises 93 entries, which list Huawei and its 114 non-US affiliates, on the Entity List, by changing the text in the Licensing Requirement column for those entries to “For all items subject to the EAR (see § 744.11 of the EAR), EXCEPT for technology subject to the EAR that is designated as EAR99, or controlled on the Commerce Control List for anti-terrorism reasons only, when released to members of a ‘standards organization’ (see § 772.1) for the purpose of contributing to the revision or development of a ‘standard’ (see § 772.1).

The rule adopts the definitions for “standard” and “standards organization” from the Office of Management and Budget Circular A-119 (Rev. 2016) (81 Fed. Reg. 4673 (Jan. 27, 2016)). “Standard” or “technical standard” is defined as:

  • Common and repeated use of rules, conditions, guidelines or characteristics for products or related processes and production methods, and related management system practices

  • The definition of terms; classifications of components; delineation of procedures; specification of dimensions, materials, performance, designs, or operations; measurement of quality and quantity in describing materials, processes, products, systems, services, or practices; test methods and sampling procedures; formats for information and communication exchange; or descriptions of fit and measurements of size or strength

  • Terminology, symbols, packaging, marking or labeling requirements as they apply to a product, process, or production method

The term “standards organization” is equivalent to “voluntary consensus standards body,” which is defined in the OMB Circular A-119 as a type of association, organization, or technical society that plans, develops, establishes, or coordinates voluntary consensus standards using a voluntary consensus standards development process that includes the following attributes or elements:

  • Openness: The procedures or processes used are open to interested parties. Such parties are provided meaningful opportunities to participate in standards development on a non-discriminatory basis. The procedures or processes for participating in standards development and for developing the standard are transparent.

  • Balance: the standards development process should be balanced. Specifically, there should be meaningful involvement from a broad range of parties, with no single interest dominating the decision-making.

  • Due process: Due process shall include documented and publically available policies and procedures, adequate notice of meetings and standards development sufficient time to review drafts and prepare views and objections, access to views and objections of other participants, and a fair and impartial process for resolving conflicting views.

  • Appeals process: An appeals process shall be available for the impartial handling of procedural appeals.

  • Consensus: Consensus is defined as general agreement, but not necessarily unanimity. During the development of consensus, comments and objections are considered using fair, impartial, open, and transparent processes.

Request for Comments

BIS is seeking comments on the rule’s impact. Comments may be submitted through the Federal eRulemaking Portal: http://www.regulations.gov, identified by docket numbers BIS 2020-0017 or RIN 0694-AI06. Comments must be submitted on or before 60 days after the date of publication in the Federal Register.

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© Copyright 2020 Squire Patton Boggs (US) LLPNational Law Review, Volume X, Number 170
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