Client Alert
U.S. Dept of Commerce Revises & Extends Temporary General License Authorizing Some Business with Huawei Technologies Co., Ltd. and Affiliates
August 26, 2019
By:
On August 20, 2019, the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) extended a revised version of the temporary general license authorizing business with Huawei Technologies Co., Ltd. and its Affiliates (collectively, “Huawei”) for 90 days until November 18, 2019. BIS also added a number of new Huawei affiliates to the Entity List.
As you know, Huawei was placed on BIS’s Entity List on May 15, 2019, prohibiting all unlicensed exports, re-exports, and transfers of U.S. origin goods and technology to Huawei. Later that week, BIS issued a temporary general license authorizing some business with Huawei for 90 days. The new temporary general license, which can be found in 84 Federal Register 43487, includes the following notable changes.
First, BIS narrowed the temporary authorization for the export of items subject to the Export Administration Regulations (“EAR”) for the purpose of supporting and maintaining fully operational networks. Specifically, the revised temporary general license only applies to activities such as patching networks and network infrastructure equipment that would be considered part of a fully operational, third-party network providing services to the third party’s customers. The revised authorization excludes activities related to general purpose computing devices or equipment not specifically related to supporting and maintaining a third-party network.
Second, BIS expanded the temporary authorization for activities to support handsets to include personal consumer electronic devices and “Customer Premises Equipment (CPE),” i.e., personally-owned equipment that enables consumers to access network communications services and distribute them within a home or small business. This applies to activities related to supporting existing Huaweiconsumer goods, such as patching software on Huawei phones, or updating software on CPEs. This authorization is intended to support existing consumer goods in the hands of consumers.
Third, BIS has determined that existing EAR rules, such as exempting published technology from the EAR, are sufficient for Huawei’s participation in the development of 5G standards. Accordingly, BIS has removed the authorization for exports related to Huawei’s participation in these activities.
Fourth, importantly, BIS now requires that exporters obtain a certification statement from the Huawei entity that is to receive an item subject to the EAR. The certification statement must specify how the export satisfies the provisions of the temporary general license, and whether it falls under paragraph (c)(1) (supporting fully operational networks), (c)(2) (supporting personal devices and CPEs), or (c)(3) (cybersecurity research and disclosures). It must also include documentation from Huawei to substantiate its compliance, as applicable. For activity authorized under (c)(1), this would include documentation showing an agreement between Huawei and a third party executed on or before May 16, 2019. In addition, the certification statement must include specific information on the items being exported and the end-use of the item. These certification statements do not need to be filed with BIS but are subject to the EAR’s record-keeping requirements.
The certification statement requirement creates a potential problem for forwarders, as BIS may take the position that forwarders have an obligation to ensure that Huawei-related shipments are supported by a certification statement. In the event that forwarders are provided with a certification statement by an exporter, it is also possible that BIS would expect the forwarder to review the certification statement to ensure that it is applicable. Accordingly, while this new requirement shifts some of the compliance burden from exporters to Huawei, it adds yet another export record for possible forwarder review.
While forwarders may be able to rely on the factual representations in the certification statements to some extent, it would be prudent for forwarders to review Huawei’s certification statements to confirm they contain the required information and apply to a given shipment.
We hope this is helpful information, but please contact Ed Greenberg (egreenberg@gkglaw.com) with any questions.