On January 10, 2025, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated and placed eight Venezuelan officials on the Specially Designated Nationals (SDN) List for “enabling Nicolas Maduro’s repression and subversion of democracy in Venezuela.” The individuals sanctioned include the president of Petroleos de Venezuela, S.A., (PdVSA), Venezuela’s state-owned oil company, and Maduro’s Minister of Transportation and president of the Venezuelan Consortium of Aeronautical Industries and Air Services (CONVIASA), the state-owned airline. In addition, OFAC has sanctioned various other Venezuelan officials in the military and police “who lead entities with roles in carrying out Maduro’s repression and human rights abuses against democratic actors.” In a press release, OFAC stated that these sanctions came about despite the United States and its allies pushing Maduro since the Venezuelan presidential elections on July 28, 2024, to commit to a democratic transition. Instead, OFAC noted that “Maduro and his representatives have continued their violent repression in an attempt to maintain power, and have ignored the Venezuelan people’s calls from for democratic accountability.”

For identifying information on these individuals, see OFAC’s press release. As a result of these OFAC actions, all property and interests in property of the designated persons that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, individually or in the aggregate, 50% or more by one or more blocked persons are also blocked. Unless authorized by a general or specific license issued by OFAC, or exempt, OFAC’s regulations generally prohibit all transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons. These prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person and the receipt of any contribution or provision of funds, goods, or services from any such person.

On January 6, 2025, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued Syria General License (GL) 24 to expand authorizations for activities and transactions in Syria following the events of December 8, 2024, and the removal of Bashar al-Assad from power.  The intent of the GL is to  ensure that U.S. sanctions do not impede activities to meet basic human needs, including the provision of public services or humanitarian assistance. The GL will be effective for six months – until July 7, 2025 – as the United States monitors the situation in Syria.

In implementing  Syria GL 24, OFAC notes that, “Given the extraordinary circumstances, and to support the Syrian people as they build a more hopeful, secure, and peaceful future, … [OFAC] is issuing GL 24 to help ensure that sanctions do not hinder services and continuity of governance functions across Syria, including the provision of electricity, energy, water, and sanitation.”  OFAC acknowledges that this GL may overlap with existing authorizations allowing for the provision of humanitarian support and aid in Syria, but will also provide clarity on certain authorized government-related services and transactions.  Syria GL 24 authorizes:

  • transactions with governing institutions in Syria following December 8, 2024;
  • transactions in support of the sale, supply, storage, or donation of energy, including petroleum, petroleum products, natural gas, and electricity, to or within Syria; and
  • transactions that are ordinarily incident and necessary to processing the transfer of noncommercial, personal remittances to Syria, including through the Central Bank of Syria.

OFAC FAQ 1207 provides more specific guidance as to what transactions are generally authorized and those that are not authorized.

The term “Syrian governing institutions” includes departments, agencies, and government-run public service providers (including public hospitals, schools, and utilities) at the federal, regional, or local level in Syria following December 8, 2024, including entities involved with Hay’at Tahrir al Sham (HTS) across all geographic areas of Syria.  It does not include or authorize transactions involving military or intelligence entities or persons.

It must be noted that this GL 24 does not unblock the property or interest in property of any blocked person under any of our sanctions programs, including Assad and his associates, the Government of Syria, Central Bank of Syria, or HTS; nor does it authorize any financial transfers to any blocked person other than for the purpose of effecting certain authorized payments to governing institutions or associated service providers in Syria. Further, this GL does not remove the restrictions placed on Syria under the State Sponsor of Terrorism (SST) designation.  Certain other transactions under this general license remain unauthorized and therefore requires close analysis before self-executing any transactions pursuant to Syria GL 24.

On January 7, 2025, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) again extended previous Russia-related General License (GL) 13 by issuing a revised GL 13L, “Authorizing Certain Administrative Transactions Prohibited by Directive 4 under Executive Order 14024,” which states that U.S. persons are authorized to pay taxes, fees, or import duties, and purchase or receive permits, licenses, registrations, certifications, or tax refunds to the extent such transactions are prohibited by Directive 4. Such transactions are allowable provided they are ordinarily incident and necessary to such persons’ day-to-day operations in the Russian Federation. Directive 4 prohibits any transaction involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation, including any transfer of assets to such entities or any foreign exchange transaction for or on behalf of such entities.

Previous GL 13K was set to expire on January 8, 2025; the revised GL 13L is set to expire on April 9, 2025. For additional background, please see our prior blog posts on this general license: January 18, 2024, November 7, 2023, May 21, 2023, April 15, 2024, July 11, 2024, and September 2024.

On January 3, 2025, President Joseph Biden issued a Presidential Order blocking an approximately $15 billion proposed acquisition by Nippon Steel Corporation (Nippon Steel) of Japan to purchase Pittsburgh-based United States Steel Corporation (U.S. Steel). Explaining that the proposed acquisition might result in actions that threaten to impair the national security of the United States, the Order requires the parties to take necessary steps “to fully and permanently abandon” the transaction within the next 30 days.

Biden’s decision fulfills the pledge he made on the presidential campaign trail that he would reject the proposed sale, which was first announced in December 2023, to ensure that the country’s third-largest steelmaker in the United States remained domestically owned. “A strong domestically owned and operated steel industry represents an essential national security priority and is critical for resilient supply chains,” Biden said in a statement announcing that he was blocking the deal.

Biden’s decision comes after the Committee on Foreign Investment in the United States (CFIUS) submitted its long-awaited report on the proposed acquisition last month and indicated that it had failed to reach a consensus on the existence of national security risks posed by the potential acquisition. Chaired by the Secretary of the Treasury and comprised of other cabinet members, CFIUS is an interagency committee that reviews certain transactions involving foreign investment in the United States to determine the effect of such transactions on national security. At the end of its reviews, CFIUS either approves a transaction, directs the parties to change the terms of their agreement to mitigate national security risks, recommends the president block or unwind the transaction, or refers the matter for presidential disposition because of no consensus among CFIUS members regarding the existence of national security risks. Once in possession of the CFIUS report, by statute, Biden had 15 days to make his final decision.

The proposed deal was controversial despite Nippon Steel’s claim that the proposed all-cash deal would include a $2.7 billion investment to renovate aging U.S. Steel facilities and expand U.S. Steel’s production capabilities to assuage any concerns regarding U.S. Steel plant closures and layoffs. Opponents, however, questioned such enhancements and raised concerns about collectively bargained benefits that expire in September 2026. Opponents also questioned whether the deal, which would make Nippon Steel the third largest steelmaker in the world, would give Nippon Steel too much leverage in trade remedy cases brought by the domestic U.S. steel industry alleging injury (or the threat of injury) due to cheap foreign imports. Another controversy emerging from Biden’s decision is whether blocking such a proposed transaction will have a chilling effect on other foreign enterprises contemplating investment in the United States, especially those from prominent U.S. allies.

A joint statement issued by Nippon Steel and U.S. Steel criticized Biden’s decision, arguing that they had “diligently and transparently engaged with CFIUS” but “the outcome was pre-determined … to satisfy the political objectives of the Biden White House.” The joint statement, however, makes no mention of President-elect Donald Trump, who also voiced opposition to the proposed merger.

On January 6, 2025—the first business day after Biden’s decision to block the proposed sale—both Nippon Steel and U.S. Steel filed separate lawsuits to challenge the Presidential Order. In the lawsuit filed in the U.S. Court of Appeals for the District of Columbia, the two steelmakers advance their argument that the decision was tainted by election-season political considerations and lacked a rational legal basis. The other lawsuit, filed in the District Court for the Western District of Pennsylvania, accuses a U.S.-based steel-making rival of interfering in the proposed merger to reduce the merger’s chances of success.

The U.S. International Trade Commission released the 2025 Basic Edition of the Harmonized Tariff Schedule of the United States (HTSUS) on January 1, 2025.  The HTSUS sets out the tariff rates and statistical categories for all merchandise imported into the United States and is based on the Harmonized System, which is the global system of nomenclature applied to most world trade in goods. The accurate classification of a commodity imported into the United States is critical for proper duty assessment, additional tariffs, and reporting other data to U.S. Customs and Border Protection and other government agencies.

For the 2025 Basic Edition, the interagency committee authorized under section 484(f) of the Tariff Act of 1930 (19 U.S.C. 1484(f)) and chaired by the Commission made various changes to the HTSUS. The list of 484(f) Committee changes and the full Change Record for 2025, reflecting all changes to the HTSUS since the 2024 Basic Edition, are available also.

Because updates and modifications are made throughout the year to the HTSUS,  U.S. importers should periodically review the tariff codes that are used for their goods to ensure that they remain accurate.

In mid-December 2024, the Department of Commerce’s International Trade Administration (ITA) issued a Final Rule amending its trade remedy regulations for the administration of antidumping duty (AD) and countervailing duty (CVD) laws. These regulatory amendments are effective on January 15, 2025.

In many instances, the ITA has codified existing procedures and methodologies. The amendments, however, also create or revise regulatory provisions relating to, inter alia, the collection of cash deposits, indicators used in surrogate country selection, application of antidumping rates in nonmarket economy proceedings, calculation of an all-others’ rate, selection of examined respondents, and attribution of subsidies received by cross-owned input producers and utility providers to producers of subject merchandise. According to an ITA press release, the new regulations seek to:

  • Strengthen ITA’s ability to ensure that exporters from non-market economies such as China, Russia and Vietnam, including state-owned enterprises, are not able to avoid paying the appropriate ADs.
  • Improve communication between the Department of Commerce and Customs and Border Protection (CBP) to better enforce the collection of AD/CVD duties at the border.
  • Ensure that subsidies received by a foreign company’s cross-owned input and utility suppliers are appropriately accounted for in the ITA’s calculation of the subsidy rate.

These new regulations are detailed in nature, and this blog post provides an overview of the most significant revisions of the AD and CVD regulations under this Final Rule. Their impact will require further detailed analysis by both U.S. and foreign companies engaged in trade remedy investigations and reviews. Coupled with its changes implemented in March 2024 regarding the manner in which it conducts certain aspects of AD and CVD investigations (see Thompson Hine Update of March 28, 2024), the ITA undertook in 2024 its first significant changes, updates and modifications to U.S. trade remedy regulations under 19 C.F.R. part 351 in many years.

Overview of Significant Modifications in Final Rule

  1. Cash Deposits and Assessment of Duties: The ITA has revised and updated its cash deposit regulation “to more accurately and holistically reflect Commerce’s establishment and application of cash deposit rates.” Specifically, the revised regulation: (1) explains that, while ITA normally calculates cash deposit rates on an ad valorem basis, it may calculate cash deposit rates on a per-unit basis; (2) describes situations in which the ITA applies cash deposit rates in a producer/exporter combination and the process by which a producer/exporter combination may be excluded from provisional measures and an AD or CVD order as a result of a calculated de minimis cash deposit rate following an investigation; (3) sets forth an AD cash deposit hierarchy for imports from market economies, an AD cash deposit hierarchy for imports from nonmarket economies, and a CVD cash deposit hierarchy; and (4) describes the effective date for cash deposit rates following the correction of ministerial errors in investigations and administrative reviews.  The ITA’s stated intent with these updates is to “provide substantially more guidance to the public on Commerce’s application of cash deposit rates in the normal course of its proceedings.”
  2. Separate Rate Regulation for Nonmarket Economies in AD Proceedings: The Final Rule notes that for “decades, in antidumping proceedings involving nonmarket economy countries, Commerce has repeatedly determined that legally distinct entities are in a sufficiently close relationship to the government to be considered part of a single entity (i.e., the government-controlled entity).” The ITA has revised its methodology in nonmarket economy AD investigations and reviews to more effectively address situations in which a state-owned entity has less than majority state ownership, but the state continues to control an entity through veto power or “golden shares.” The modifications under this Final Rule allow the ITA to apply an updated separate rate test and analysis to entities located in nonmarket economies; and afford the ITA the ability to analyze an entity directly owned or controlled by a nonmarket economy government and located in a third country and determine based on record information if that third-country exporter should be treated as part of the nonmarket economy entity and receive the nonmarket economy entity rate or if it should be granted a separate AD rate. The ITA believes this modification is “consistent with Commerce’s historical analysis and treatment of entities located in nonmarket economies and allows for Commerce to consider the legal and administrative levers present in third countries that might allow for the control of an entity that exports subject merchandise to the United States and is owned, in part or in whole, by the nonmarket economy government.”
  3. Concerns About Potential for Manipulation of Prices, Production, or Export Decisions, by Affiliated Input Suppliers and Home Market Resellers: The new regulations modify the ITA’s practice of collapsing affiliated producers that “have production facilities for similar or identical products that would not require substantial retooling of either facility in order to restructure manufacturing priorities” out of concern over the manipulation of prices and production. This Final Rule explicitly addresses the ability of the ITA to collapse producers and non-producers when it is determined that there is significant potential for the manipulation of prices or production between two or more affiliated parties. The Final Rule also addresses certain exceptions to the ITA’s collapsing practice while reiterating that such determinations are case-specific and often based on proprietary information.
  4. Updated Methodology for Selecting Economically Comparable Surrogate Countries: The Final Rule assists in codifying the ITA’s established practice of considering additional factors to determine which countries may be deemed economically comparable to a non-market economy for purposes of determining normal value in nonmarket economy proceedings. The rule codifies each of the three steps the ITA undertakes in selecting surrogate countries and its practice of annually determining market economies economically comparable to individual nonmarket economies and listing those market economies on Commerce’s website.
  5. New Provision Covering Purchase of Goods for More than Adequate Remuneration (MTAR): For the first time, the ITA has promulgated CVD regulations to address the government purchase of goods for more than adequate remuneration (MTAR) and the provision of rebates or exemptions of indirect taxes and import charges to exporters that purchase capital goods and equipment. While such an alleged subsidy has appeared before the ITA in only limited investigations, the ITA notes that it has developed certain methodologies as to this type of financial contribution, especially where the government is both a provider and a purchaser of the good at issue. The Final Rule offers an explanation for such transactions, codifies the provisions, and adds certain language as to prices that might be excluded as potential benchmarks from the ITA’s analysis in determining the benefit of a MTAR subsidy.
  6. Revisions to Calculation of Ad Valorem Subsidy Rates and Attribution of Subsidies to a Product: This Final Rule explains the ITA’s adjustment of the ad valorem subsidy rate when a country is experiencing high inflation, which is defined for this provision as an inflation rate greater than 25 percent per annum during the relevant period. The ITA notes that when “Commerce developed the current attribution rules for cross-owned companies 25 years ago, it had limited experience with the attribution of subsidies between affiliated companies.” Since then, the ITA has developed a detailed practice as to the treatment of cross-owned companies and the attribution to respondents of subsidies received by cross-owned companies. Based on this experience, it has revised its attribution rules and formally codified them in this Final Rule and, in doing so, fully explaining: (i) the cross-owned input producer attribution rule, (ii) the primarily dedicated input provision, (iii) cross-owned providers of utility products, (iv) other services providers; (v) the language for the transfer of a subsidy; and (vi) the non-attribution of subsidies to plants or factories and the general standing for finding subsidies tied.

Other AD and CVD Regulations Modifications

In addition to these major revisions under the Final Rule, the ITA has also adopted the following modifications addressing:

  • The citation of certain New Factual Information on the record.
  • The procedures for the selection of additional respondents in various proceedings.
  • The requirements for interested parties filing factual information to rebut, clarify or correct factual information on the record.
  • The deadlines for the submission of Benchmark and Surrogate Value Data.
  • The sharing of data with CBP for not only fraud investigations but also negligence and gross negligence investigations.
  • The removal of the Integral Linkage Specificity Provision and the Agricultural and Small- and Medium-Sized Businesses Exceptions to the Specificity Rule for CVD investigations.
  • Indirect Taxes and Import Charges on Capital Goods and Equipment (Export Programs) as CVD subsidies.
  • The removal of the regulations on Green Light and Green Box Subsidies.
  • The ITA’s CVD methodology and long-standing CVD policies.

The Final Rule provides details on these updates and modifications more technical or minor in nature, or that codify and reflects modifications made by Congress in 2015 to Title VII of the Tariff Act of 1930.

Updated AD and CVD Annexes

In addition, under a separate Final Rule, the ITA has updated the annexes accompanying the AD and CVD regulations. Specifically, the ITA has updated the number of days and the regulations cross-referenced for each of the listed events and deadlines for parties in AD and CVD investigations and administrative reviews. The ITA has also updated the annexes pertaining to sunset reviews and added new annexes IX, X, and XI to provide additional guidance to Scope Inquires, Circumvention Inquiries, and Covered Merchandise Referrals.

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While many of these revisions essentially codify and modify long-standing ITA AD and CVD investigatory practices, they are detailed and extensive in nature. Thompson Hine’s International Trade practice group has experience with AD and CVD laws, regulations, and policies and is available to assist companies with questions or concerns about this Final Rule.

On December 30, 2024, the Department of Commerce’s Bureau of Industry and Security (BIS) released a year-end update of the Boycott Requester List. This list notifies companies, financial institutions, freight forwarders, individuals, and other U.S. persons of potential sources of certain boycott-related requests they may receive during the regular course of business. Introduced in March 2024, this resource is a public list of entities identified as making boycott-related requests in reports received by the BIS and follows the BIS July 2023 policy memo implementing efforts to enhance enforcement and compliance with U.S. antiboycott regulations. See Thompson Hine Updates of July 28, 2023 and March 29, 2024. The updated list can also be downloaded in Excel format from the BIS Office of Antiboycott Compliance website. 

A party’s inclusion on the Boycott Requester List does not mean that U.S. persons are restricted from dealing with the listed party. However, a party’s inclusion puts U.S. persons on notice that the listed party is more likely to make reportable boycott-related requests. BIS encourages U.S. persons to review transaction documents from all sources, especially those involving these listed parties, to identify possible boycott-related language and to determine whether there is any reporting requirement. The updated public list includes 38 additional entities, but also has removed over 20 entities from the previous version of the list. A list of those removed is available here.

On December 23, 2024, the Office of the U.S. Trade Representative (USTR) announced it was initiating an investigation into China’s acts, policies, and practices related to China’s targeting of the semiconductor industry for dominance. The investigation will be conducted under Section 301 of the Trade Act of 1974, and will focus on China’s manufacturing of foundational semiconductors (also known as legacy or mature node semiconductors).  The investigation will include reviewing the extent that such legacy semiconductors “are incorporated as components into downstream products for critical industries like defense, automotive, medical devices, aerospace, telecommunications, and power generation and the electrical grid.”  The USTR indicated that the investigation will also initially “assess whether the impact of China’s acts, policies, and practices on the production of silicon carbide substrates (or other wafers used as inputs into semiconductor fabrication) contributes to any unreasonableness or discrimination or burden or restriction on U.S. commerce.”

The USTR’s press release states that the “[e]vidence indicates that China seeks to dominate domestic and global markets in the semiconductor industry and undertakes extensive anticompetitive and non-market means, including setting and pursuing market share targets, to achieve indigenization and self-sufficiency. China’s acts, policies, and practices appear to have and to threaten detrimental impacts on the United States and other economies, undermining the competitiveness of American industry and workers, critical U.S. supply chains, and U.S. economic security.”  Further evidence indicates that China’s targeting of the semiconductor industry for dominance is leading to significant capacity expansion, artificially and unsustainably lower domestic and global prices, a protected domestic market, and emerging overconcentration of production capacity in China.  According to the USTR, China in just six years has nearly doubled its global share of foundational logic semiconductors production capacity, and its share is projected to reach approximately half of the world’s capacity by 2029.

The USTR will now seek consultations with China in connection with the investigation. In addition, the USTR is seeking public comments on:

  • China’s acts, policies, and practices related to its targeting of the semiconductor industry for dominance.
  • Anticompetitive and non-market means employed by China in pursuit of its semiconductor industry targeting objectives, including political guidance, directives, and control within state and private enterprises, activities of state-owned or state-controlled enterprises, market access restrictions, opaque regulatory preferences and discrimination, wage-suppressing labor practices, massive state support of industry (including government guidance funds), and forced technology transfer (including state-directed cyber intrusions and cybertheft of intellectual property).
  • Whether China’s acts, policies, and practices are unreasonable or discriminatory.
  • Whether China’s acts, policies, and practices burden or restrict U.S. commerce, and if so, the nature and level of the burden or restriction. This would include economic assessments of the burden or restriction on semiconductors, semiconductor manufacturing including foundries, silicon carbide substrates or other wafers, and downstream products, with a particular focus on critical industries, such as defense, automotive, medical devices, aerospace, telecommunications, and power generation and the electrical grid.
  • Whether China’s acts, policies, and practices are actionable under Section 301(b) of the Trade Act of 1974 and what action, if any, should be taken, including tariff and non-tariff actions.

The docket for submitting comments will open on January 6, 2025, and any written comments must be filed no later than February 5, 2025. Comments must be filed on the USTR portal at https://comments.ustr.gov/s/. Submissions should be placed on the docket entitled “Request for Comments on the Section 301 Investigation of China’s Acts, Policies, and Practices Related to Targeting of the Semiconductor Industry for Dominance,” docket number USTR-2024-0024.

On March 11 and 12, 2025, the USTR Section 301 Committee will hold a public hearing in the main hearing room of the U.S. International Trade Commission, 500 E Street SW, Washington DC 20436, beginning at 10:00 a.m. EST. Requests to appear at the hearing and a summary of testimony must be filed by February 24, 2025; and any post-hearing comments must be filed within seven days after the last day of the public hearing. Notice of intent and summary of testimony must be filed on the USTR portal under the docket entitled “Request to Appear at the Hearing on the Section 301 Investigation of China’s Acts, Policies, and Practices Related to Targeting of the Semiconductor Industry for Dominance,” docket number USTR-2024- 0025.

On December 19, 2024, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued Russia-related General License 115 to generally authorize transactions involving Gazprombank that are related to civil nuclear energy. After sanctioning Gazprombank in November 2024 in order to further limit Russia’s access the international financial system (see Thompson Hine Update of November 22, 2024), OFAC has issued this general license to allow transactions with Gazprombank, or any entity in which Gazprombank owns, directly or indirectly, a 50 percent or greater interest, that are related to civil nuclear energy until June 30, 2025.

The term “related to civil nuclear energy” means transactions undertaken solely to maintain or support civil nuclear projects initiated before November 21, 2024. OFAC Russia FAQ 1203 further clarifies that “civil nuclear energy means the following activities when undertaken solely to maintain or support civil nuclear energy projects and operations initiated or under construction as of November 21, 2024: the extraction, production, refinement, conversion, enrichment, fabrication, transport, or purchase of uranium in any form; the production, generation, transmission, or exchange of nuclear power, fuel, or waste; and the operation of civil nuclear energy projects.” This GL 115 does not cover transactions related to the development of any new civil nuclear energy power plants after November 21, 2024, or transactions related to the Paks II nuclear power plant project, including Paks II. Nuclear Power Plant Private Limited Company (Paks II. Ltd.), or any successor project. Certain other transactions under this general licenses remain unauthorized and therefore requires close analysis.

On December 2, 2024, the Department of Commerce’s Bureau of Industry and Security (BIS) issued two new rulemakings in an ongoing effort to “further impair [China’s] capability to produce advanced-node semiconductors that can be used in the next generation of advanced weapon systems and in artificial intelligence (AI) and advanced computing, which have significant military applications.” These rules include: (i) new controls on 24 types of semiconductor manufacturing equipment and 3 types of software tools for developing or producing chips; (ii) new controls on high-bandwidth memory, which is a key component of advanced computing integrated circuits (ICs) and AI; (iii) two new Foreign Direct Product rules; (iv) new red flag guidance to address compliance and diversion concerns; and (v) 140 additions and 14 modifications to the BIS Entity List.

BIS has stated that these two new rulemakings build on the agency’s past efforts to restrict China’s ability to both purchase and manufacture certain high-end semiconductors critical for military applications. See past Thompson Hine Updates of October 2022, October 2023, and April 2024 for additional background on this issue.

Note: these new regulations are technically complex, and this blog post only provides an overview of their intent and scope. Their impact will require further detailed analysis by both U.S. and foreign companies in the advanced semiconductor and advanced computing industries.

New Controls on Semiconductor Manufacturing Equipment

The Interim Final Rule (IFR) issued by BIS changes the Export Administration Regulations (EAR) controls for certain advanced computing items, supercomputers, and semiconductor manufacturing equipment (SME). Specifically, the IFR updates Supplement No. 1 to part 774 of the EAR by revising eight existing Export Control Classification Numbers (ECCNs) that cover SME and related items and adds eight new ECCNs. As detailed in the IFR, these new export restrictions on SME and related items impact equipment needed to produce advanced-node ICs, including certain etch, deposition, lithography, ion implantation, annealing, metrology and inspection, and cleaning tools. 

New Controls on Software Tools for Developing or Producing Chips

The IFR also includes new controls on certain software tools used in the development and/or production of advanced-node ICs, including certain software that increases the productivity of advanced machines or allows less-advanced machines to produce advanced chips. 

Importantly, the IFR clarifies, existing controls on “software keys,” which are used to activate or verify a software program, will now also apply to the export, reexport, or transfer (in-country) of software keys that allow access to the use of specific hardware or software or renewal of existing software and hardware use licenses. This may encompass certain software structured as Software as a Service (SaaS).

The new controls on certain software tools add restrictions under 15 C.F.R. § 744.23 (supercomputer, advanced-node ICs, semiconductor equipment end use controls) onElectronic Computer Aided Design (ECAD) and Technology Computer Aided Design (TCAD) software and technology when there is “knowledge” that such items will be used for the design of advanced-node ICs to be produced in Macau or a destination in Country Group D:5 of the EAR.

New Controls on High-Bandwidth Memory and New License Exception HBM

The IFR also places new controls on high-bandwidth memory (HBM), which is critical to both AI training and inference at scale and is a critical component of advanced computing ICs. These new controls apply to U.S.-origin HBM and foreign-produced HBM subject to the EAR under the new advanced computing Foreign Direct Product rule detailed below. The IFR, however, exempts certain HBM from the EAR’s licensing regime via the new License Exception HBM. This license exception authorizes certain exports, reexports, and transfers (in-country) for some of the new HBM commodities that this IFR adds to ECCN 3A090.c when involving U.S. or certain allied owned companies located in destinations of concern.

Two New Foreign-Direct Product Rules for Advanced Computing and Semiconductor Manufacturing Items

The IFR establishes two new Foreign Direct Product (FDP) rules to impair the capability to produce “advanced-node” ICs in certain destinations or by certain entities of concern.

Semiconductor Manufacturing Equipment (SME) FDP Rule – extends jurisdiction over specified foreign-produced SME and related items if there is “knowledge” that the foreign-produced commodity is destined to Macau or a destination listed in Country Group D:5 of the EAR, including China. 

Footnote 5 (FN5) FDP Rule – extends jurisdiction over specified foreign-produced SME and related items if there is “knowledge” of certain involvement by an entity on or added to the BIS Entity List with a FN5 designation (see “Addition of 140 Entities to BIS Entity List” section below). 

There are revisions to the de minimis requirements that correlate to the new SME FDP and FN5 FDP Rules that extends jurisdiction over specified foreign-produced SME and related items containing any amount of U.S.-origin ICs if it is destined to Macau or a destination listed in Country Group D:5 of the EAR, including China, or the end-user is a FN5 entity

New Red Flag Guidance

BIS has long had “Know Your Customer” guidance and “red flag” indicators for compliance assistance under 15 C.F.R. Part 732, Supplement No. 3. This IFR, however, introduces eight new red flag indicators (see new Red Flag indicators 20 to 27) to assist parties in identifying certain scenarios or conditions that warrant additional diligence. The new red flag guidance also helps parties determine whether their products fall within the scope of certain provisions under 15 C.F.R. § 734.9(e)(3) pertaining to the two new FDP rules described above.

Addition of 140 Entities to BIS Entity List

Concurrently, BIS issued a Final Rule that adds 140 entities to the Entity List. These entities are located in China, Japan, South Korea, and Singapore and have been determined by the U.S. Government to be acting contrary to the national security and foreign policy interests of the United States. These entities include semiconductor fabrication facilities, tool companies, and investment companies that BIS claims “are acting at the behest of Beijing to further [China’s] advanced chip goals which pose a risk to U.S. and allied national security.” 

According to the BIS, all 140 entities are involved with the development and production of advanced-node ICs and/or semiconductor manufacturing items, and/or have supported the Chinese government’s Military-Civil Fusion Development Strategy. The full list of these 140 entities and identifying information is available in the text of the Final Rule.

This Final Rule also modifies 14 existing entries on the Entity List under the destination of China. It adds Footnote 5 (referenced above) to 9 of the 140 entities too, thereby extending the BIS Entity List license requirements to the foreign direct products subject to the EAR produced by those entities.

Effective Dates of the IFR and Final Rule

The IFR took effect December 2, 2024. However, exporters, reexporters, and transferors are not required to comply with the changes made to various ECCNs under Category 3 of the Commerce Commodity List (CCL) under December 31, 2024. Likewise, exporters, reexporters, and transferors do not have to comply with the two new FDP rules until December 31, 2024.

This Final Rule also took effect December 2, 2024. However, for the newly listed entities, shipments of items removed from eligibility for a License Exception or export, reexport, or transfer (in-country) without a license (NLR) as a result of this regulatory action and that were en route aboard a carrier to a port of export, reexport, or transfer (in-country), on December 2, 2024, pursuant to actual orders for export, reexport, or transfer (in-country) to or within a foreign destination, may proceed to that destination under the previous eligibility for a License Exception or export, reexport, or transfer (in-country) without a license (NLR), provided the export, reexport, or transfer (in-country) is completed no later than on January 2, 2025. Additionally, BIS Entity List license requirements and other Entity List-related requirements linked to Footnote 5 designations have a delayed compliance date of December 31, 2024.

Public Comments Regarding the IFR

Although the IFR largely takes effect immediately upon publication, BIS will accept public comments regarding the IFR until January 31, 2025. BIS is actively seeking detailed comments on any inadvertent errors or potentially unintended oversights in the details of this highly complex rulemaking. Comments must be submitted to the Federal rulemaking portal at: www.regulations.gov. The regulations.gov ID for this IFR is BIS-2024-0028, and submissions should refer to RIN 0694-AJ74 in all comments.