U.S. Expands Export Controls: New Affiliates Rule Targets Foreign Tech Companies
The U.S. Department of Commerce's Bureau of Industry and Security (BIS) has introduced the Affiliates Rule, an interim final rule effective since September 29, 2025. This rule extends export controls to entities 50% or more owned by those on the Entity List, Military End-User (MEU) List, or certain entities on the Specially Defined Nationals and Blocked Persons (SDN) List. Non-compliance can result in severe penalties and imprisonment.
The Affiliates Rule automatically subjects companies to restrictions if they are 50% or more owned by a listed entity. This notably impacts Chinese technology companies, as seen with Huawei's placement on the Entity List. Exporters must now determine counterparty ownership and obtain licenses when ownership is unclear. The Consolidated Screening List (CSL) may no longer be exhaustive, requiring additional screening tools.
BIS has issued a 60-day Temporary General License, authorizing transactions with certain non-listed affiliates until November 28, 2025. Stakeholders have until October 29, 2025, to submit comments on the interim final rule. The End-User Review Committee (ERC) may exclude certain affiliates on a case-by-case basis. The rule is accessible online for further review.
The Affiliates Rule significantly expands U.S. export controls, affecting entities worldwide. It emphasizes the importance of thorough ownership screening and compliance with U.S. export regulations. Companies must adapt their processes to avoid severe penalties and ensure continued access to U.S. technology.
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