BIS Issues New Rule to Remove Export Control Barriers for Standards-Setting Activities

The changes, effective July 18, build on rules issued in 2020 and 2022 that authorized the release of certain controlled technology for certain standards-setting activities, including when companies on the Entity List, such as Huawei, are participating in those bodies (see 2006160035 and 2209080038). The agency said it needed to continue revising its rules after receiving public comments that its restrictions were still causing uncertainty and risked ceding U.S. standards leadership to other countries.

The rule is part of a broader effort by the Biden administration to “remove and prevent barriers to private sector participation in standards development,” the agency said, adding that those barriers are a risk to U.S. national security. The administration decided it needed to “comprehensively” address issues surrounding standards-setting bodies in order for American companies to drive the future of standards setting, especially for critical and emerging technologies such as biotechnology and quantum information.

Any national security threat caused by U.S. companies ceding standards-setting leadership “far outweighs the risks related to the limited release of the authorized low-level technology and software to parties on the Entity List when released in the context of a ‘standards-related activity,’” the agency said. “BIS has concluded that excluding end-use and end-user controls from the authorization has had and will continue to have unintended negative consequences on the U.S. national security interests by curtailing U.S. involvement in legitimate standards-related activities.”

With the rule, BIS said it’s amending the Export Administration Regulations so that activities that meet its definition of “standards-related activity” are no longer subject to the EAR. “Specifically, when released for a ‘standards-related activity,’ ‘technology’ or ‘software’ is not subject to the EAR if it meets the item scope of 734.10(b)(1) and is released for a ‘published’ standard and/or occurs with the intent that the resulting standard will be ‘published,’” BIS said. The agency also revised its definition for “standards-related activity” to clarify that it includes activities “conducted with the intent” to publish a standard, “as well as those conducted for an already ‘published’ standard,” among other changes.

Public comments on the rule are due Sept. 16.

The agency used much of the rule to respond to public comments it received since expanding its standard-setting bodies authorization in 2022, saying that it agreed with U.S. industry that the 2022 rule wasn’t “broad enough to allow U.S. companies to participate freely in standards development due to uncertainty regarding whether the information they are sharing is subject to the EAR and, if so, whether EAR license requirements apply.” Although the agency said it “recognizes the importance of protecting sensitive and leading-edge U.S. technology,” it also said there are important “national security implications of limiting U.S. participation and leadership in international standards development.”

This new rule will “support U.S. companies’ efforts to create and maintain a leadership position in the global standards community in all industries,” and gives them “the ability to freely participate in all standards-development forums by making the release of software or technology in such forums not subject to the EAR,” as long as those releases meet criteria outlined by BIS.

BIS received several comments asking it to expand its definition of “standards-related activity" and said it agreed with most of the feedback. It received at least one comment asking it to change the definition to explicitly authorize the release of controlled technology in a Voluntary Consensus Standards Body (VCSB) -- a body that doesn’t require standards to be published -- but BIS said this change would be “unwarranted” because the “relevant activities of a VCSB are already captured in the definition of ‘standards-related activity.’”

It also said it received comments from industry members that U.S. companies, standards organizations and their members faced an “export control compliance burden” by having to comply with the agency’s previous rules. But BIS said the new rule should address those concerns.

“One organization’s compliance burden has been reduced under the existing regulations, and with the publication of this rule and the changed focus on the activities themselves, BIS fully expects that the compliance burden for the other organizations will also be reduced.”