Exporters Should Reevaluate Classifications After BIS Advanced Tech Rule, Law Firm Says

Companies involved in the quantum computing, semiconductor manufacturing, additive manufacturing and other advanced technology industries covered by a recent Bureau of Industry and Security export control rule should review their compliance programs to make sure they can manage the upcoming license requirements, Gibson Dunn said in a client alert.

The BIS rule aims to align U.S. controls with similar emerging tech restrictions being imposed by trade partners outside the Wassenaar Arrangement, which has struggled to advance certain export control proposals because Russia remains a member with veto power (see 2409050028 and 2405300063). Gibson Dunn said it’s expecting more nations to “similarly mirror” the BIS controls in the “coming months,” saying businesses should reevaluate their previous item classifications, update their deemed export and reexport policies, “and ensure that any required reports are filed in a timely manner.”

Companies may specifically “wish to consider revising or re-evaluating human resources policies in order to more effectively comply with the” new controls “relating to foreign nationals’ access to controlled software and technology,” the firm said. It added that BIS is continuing a “several-year experiment with modified deemed export controls,” which place license restrictions on certain transfers that take place on U.S. soil.

One notable portion of the new rule puts in place deemed export control “grandfathering clauses” that will allow certain foreign-person employees and contractors to continue to access certain controlled “technology” and “software” if they already are employed and have access to that technology and software. Other parts of the rule will “wholly exclude” advanced semiconductor technology and software from deemed export control rules, Gibson Dunn said.

The firm said this new framework “will help ensure that the United States retains and continues to attract the international talent now working with U.S. universities, research institutes, and companies in advanced and emerging technologies and that BIS’s new export controls will not disrupt the work of non-U.S. collaborators with individual license requirements for foreign nationals on their teams.”

Gibson Dunn also said companies should make sure to “evaluate the potential applicability” of new License Exception Implemented Export Controls (IEC) to the items they export. The new exception will allow exporters to ship certain items covered under the rule to certain countries -- without a license -- if those countries have “equivalent national controls” on the same items.