NEXT STEPS FOR COMPANIES FOLLOWING THE LATEST U.S. GOVERNMENT EXPORT BAN

Contact: Michael Jones and Miku Mehta, Procopio
Posted Jun 3, 2019

A recent change in U.S. export control regulations requires all U.S.-based entities (including subsidiaries of foreign-headquartered companies) to immediately stop exporting most technologies to Huawei and several of its related entities. Violations of these regulations can result in fines and/or imprisonment. U.S.-based entities that export technology and products, as well as overseas companies that receive U.S.-based technology, need to be aware of which technologies are covered by the new regulations, the nature of the restrictions, and what kinds of risk mitigation strategies may be used to avoid running afoul of U.S. export law. Below we summarize the new regulation as well as potential risk mitigation actions companies may take.

On May 16, 2019, the U.S. government added Huawei Technologies and 68 of its affiliates around the world in 26 countries to the “Entity List” with little warning. This list essentially bans exports of most U.S.-originated technologies and products to Huawei, unless an export license is obtained from the U.S. Bureau of Industry and Security (BIS). Further, there is a presumption of denial for obtaining such licenses, and further, exports to the listed Huawei entities are not eligible for license exceptions. As a result, any company that makes, sells or ships technology to the listed Huawei entities needs to immediately determine whether their technology is subject to export control, and if so, take the necessary countermeasures to avoid violation of the ban.

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