BIS Further Expanded the Application of Foreign Direct Product Rules

On February 3, 2022, the Department of Commerce, Bureau of Industry and Security (BIS) published a final rule (the Final Rule) revising the organization and substance of the foreign-direct product (FDP) rules.1 BIS has consolidated the FDP rules in the previously reserved §734.9 of the Export Administration Regulations2 (EAR), whereas, before, one was required to reference multiple sections to apply the FDP rules. Based on a surface-level review of the rule and corresponding comments from BIS in the Federal Register, the Final Rule may seem to have merely reorganized the rules in one place in the EAR for ease of use; however, the Final Rule may have a material impact on companies on the Entity List and designated with footnote 1, such as Huawei and its suppliers.