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Foreign Direct Product Rules: Clarifications and Corrections

News & Blog

BIS has issued a final rule which re-organizes, makes minor corrections, and clarifies parts of the Foreign-Direct Product Rules (FDP). The FDP, including the footnote regarding license requirements, review policy, and license exception applicability previously found in the Entity List, has been consolidated in §735.9 of the Export Administration Regulations (EAR).

BIS has corrected an early revision to General Prohibition Three in §736.2 to clarify that the application of the rule relates to U.S. origin technology or software. BIS has also clarified the FDP by adding double quotation marks around terms that are defined in part 772 of the EAR and clarified that foreign-direct products subject to the EAR are not necessarily subject to a license requirement and that license requirements must be determined based on an assessment of the classification, destination, end user and end use of the items.

The rule also clarifies the circumstances under which the ‘‘600 series’’ FDP rule applies to items described in Export Control Classification Number (ECCN) 0A919. The text of ECCN 0A919 states that it includes the foreign direct product of ‘‘600 series’’ technology or software. However, before this rule, the text of General Prohibition Three did not explicitly include ECCN 0A919 items when describing other aspects of determining applicability of the ‘‘600 series’’ FDP rule.

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