In an effort to maintain U.S. technological leadership and to ensure continued international collaboration with allies, the Department of Commerce’s Bureau of Industry and Security (BIS) issued an interim final rule with innovative new controls on certain critical and emerging technologies. These controls, which have been devised through extensive discussions with international partners, are designed to address the potential national security and foreign policy risks associated with critical technologies that have potential military applications, including quantum computing items, advanced semiconductor manufacturing equipment, gate all-around field-effect transistor (GAAFET) technology, and additive manufacturing items.
This interim final rule adds several new export control classification numbers (ECCNs) to the Export Administration Regulations (EAR), establishes two new worldwide license controls, and creates a new license exception for countries that have implemented equivalent technical controls for these newly added items. Exclusions for deemed exports have also been added. This rule is effective September 6, 2024, although compliance with certain license requirements related to quantum items is not required until November 5, 2024. A brief summary of these additions to the EAR is below, along with information on how to provide comments on this new rule.
New ECCNs for Advanced Technologies
BIS added 18 new ECCNs to the Commerce Control List (CCL) that are subject to harmonized Implemented Export Controls (IEC) developed by the United States and our international partners. These ECCNs, which cover items and technology for quantum computing, production of advanced semiconductor devices, high-performance computing chips for supercomputers, and the production of metal or metal alloy components, are found in the 900 series of the CCL:
- 2B910 – Additive manufacturing equipment, designed to produce metal or metal alloy components; related software and technology in 2D910, 2E903, and 2E910;
- 3A901 – Electronic items not specified by 3A001;
- 3A904 – Cryogenic cooling systems and components;
- 3B903 – Scanning Electron Microscope (SEM) equipment designed for imaging semiconductor devices or integrated circuits;
- 3B904 – Cryogenic wafer probing equipment;
- 3C907 – Epitaxial materials consisting of a “substrate” having at least one epitaxially grown layer and containing other specified materials;
- 3C908 – Fluorides, hydrides, chlorides, of silicon or germanium, containing other specified materials;
- 3C909 – Silicon, silicon oxides, germanium or germanium oxides, containing any other specified materials; related software and technology in 3D901, 3D907, 3E901, and 3E905; and
- 4A906 – Quantum computers and related “electronic assemblies” and “components” therefor; related software and technology in 4D906 and 4E906.
Because this rule affected existing ECCNs 2E003, 3A001, 3B001, 3C001, 3D001, 3D002, 3E001, 4D001, and 4E001, those ECCNs have been revised to reflect these changes, rather than establishing new ECCNs for those items.
Two New Global License Requirements and a New License Exception
In conjunction with our international partners, BIS added new worldwide license requirements to the national security (NS) and regional stability (RS) controls in the EAR. The NS controls, found in Section 742.4(a)(5) and (b)(10), set forth this license requirement and corresponding review policies, dependent upon the destination. The new RS controls are found in 742.6(a)(10) and (b)(11).
The CCL typically indicates the application of NS and RS controls to an ECCN by reference to the Country Chart in Supp. 1 to Part 738. These new controls, however, apply to all export destinations. Only those countries that have instituted the IEC are eligible for new License Exception IEC, which will authorize exports and reexports to countries that have implemented equivalent controls on these items.
BIS is maintaining a list of countries that have implemented equivalent export controls for these items that align with those in the EAR. This list, License Exception IEC Eligible Items and Destinations, is incorporated by reference in Section 740.24 and identifies specified items that may be exported to destinations that meet the requirements of License Exception IEC. This list is expected to change as more countries bring their export controls on these critical technologies into alignment with the EAR.
Exclusions for Deemed Exports and Reexports
The United States is highly dependent on foreign talent in many of critical technology areas. This is particularly true with respect to quantum computing, where there is a global shortage of expertise. Research and development for these technologies often occurs globally, involving universities, national laboratories, and private companies. To avoid disruptions to ongoing research, the new rules implement certain exclusions for deemed exported and deemed reexports in the new worldwide NS and RS controls. These exclusions will provide for the continued sharing of technologies related to specified items and allow continued U.S. leadership in these areas.
A new General Order No. 6 provides for a GAAFET General License, which authorizes the export and reexport of certain technology for the development or production of integrated circuits that began on or prior to September 6, 2024. General Order No. 6 also contains a quantum computing general license, authorizing deemed exports and reexports of quantum technology and software to certain foreign persons. Due to the national security concerns associated with these technologies, these general licenses are subject to reporting requirements to the U.S. government.
Request for Comments
The measures above represent significant changes to the EAR, and have implications for licensing, deemed exports, supply chains, and R&D. BIS is therefore encouraging the public to provide comments on various aspects of this rule, including the following:
- The framework for IEC and implications for supply chains and compliance programs;
- The scope and clarity of the new ECCNs and license exceptions;
- How national security concerns could be addressed in the absence of a quantum technology deemed export licensing requirement;
- Anticipated challenges associated with compliance with deemed export restrictions; and
- Anticipated aspects of technology development and interactions relevant for potential deemed export restrictions.
Companies engaged in critical and emerging technologies should consider the potential implications for their businesses that result from this rule and provide BIS with relevant input and suggestions. Comments are due no later than November 5, 2024, and may be submitted via the Federal rulemaking portal at regulations.gov, docket number BIS-2024-0020.
Conclusion
This new interim final rule results in numerous changes to the EAR, with implications for those involved in critical and emerging technologies throughout the world. Companies should review the extent to which they engage with items and technology covered by these changes, and determine whether BIS licenses will be required for their continued work in these areas.
Contact us if you have questions about these new developments or are interested in submitting comments on these proposed rules.