Following the dispute between Huawei & US, the Trump administration is considering significant changes to the Export Administration Regulations (AER).
The Department of Commerce heading up these changes are lowering the threshold of US origin controlled content in products, from 25% to 10%. The regulations that have been in place for 30 years have agreed that if an export has 25% or less of US content, it will not be subject to EAR and therefore not require an export license.
“The proposed rules under consideration could negatively impact a wide range of commercial transactions involving items that are not sensitive for any national security reason.”
Trade associations have warned 'Creating a special rule for one set of targeted entities sets a dangerous precedent for future rules, while also increasing the compliance risk for U.S. exporters, big and small.’
Both proposed changes undermine the administration’s national security objectives to promote American prosperity and preserve our nation’s lead in research, technology inventions and innovations,” they said.
When interviewed by The Globe and Mail newspaper, Huawei Founder, Ren Zhengfei, said the company is planning to move their California offices to Canada.
“According to the U.S. ban, we couldn’t communicate with, call, email or contact our own employees in the United States,” he told the newspaper.
The trade groups are coming together and asking the Department of Commerce to consider stakeholder input before changing the existing de minimis and foreign direct product rules.
Trade groups that have signed the letter to Commerce Secretary Wilbur Ross:
- BSA/The Software Alliance,
- Computing Technology Industry Association
- Information Technology Industry Council
- National Association of Manufacturers
- National Foreign Trade Council
- Semiconductor Industry Association
- Software & Information Industry Association and
- U.S. Council for International Business