Effective 10 November 2025, the US Department of Commerce’s Bureau of Industry and Security (BIS) published a rule (hereafter, the Suspension Rule) suspending implementation of the “Affiliates Rule” for one year ending on 9 November 2026. Suspension of the Affiliates Rule was first announced by Treasury Secretary Bessent on 1 November as part of trade negotiations between the United States and China.
As detailed in our prior alert, the Affiliates Rule extends Export Administration Regulations (EAR) license requirements applicable to entities designated on the BIS Entity List or Military End Users (MEU) List or subject to EAR § 744.8 to affiliates in which those entities have a 50% or greater ownership interest directly or indirectly, whether held individually or in the aggregate.
Clarification of Suspension
The Suspension Rule provides important clarity on the scope of the suspension and BIS’s enforcement priorities during the one-year period.
First, the Affiliates Rule is suspended in its entirety, covering affiliates not only of Entity List designees but also of companies on the Military End User List and subject to EAR § 744.8.
Second, the suspension is global and is not restricted to just Chinese companies.
Third, BIS will continue to monitor and evaluate U.S. national security and foreign policy interests related to non-listed foreign affiliates of listed entities during the one-year suspension, suggesting that BIS could take action to designate entities otherwise subject to the Affiliates Rule suspension.
Sector-Specific Considerations
The Affiliates Rule affects companies differently depending on product lines, ownership structures, and service obligations. For example:
- Semiconductor and electronics manufacturers selling tools, components, or design software should map ownership interests in joint ventures and downstream partners, particularly in China and Southeast Asia, where cross‑ownership structures are common.
- Cloud hosting, software deployment, and remote support may require authorization if a listed entity has a 50% or greater ownership interest in the customer’s parent or subsidiary receiving access to controlled technology.
- Multi-year obligations for servicing of capital equipment and industrial machinery from the US or using EAR items will necessitate obtaining specific BIS licenses once the suspension expires.
Recommendations
Because the Affiliate Rule suspension is temporary, companies should continue to develop ownership screening procedures to fully comply with the Rule’s substantial due diligence requirements, and ensure recordkeeping addresses beneficial ownership to a sufficient degree for effective diligence.
For dealings with affiliates subject to the reprieve, companies should structure transactions in anticipation of the suspension’s expiry, and even the possibility of a specific designation before then. Assume transactions with multi-year performance obligations that require provision of EAR commodities, software, and technology will not be possible after 9 November 2026, absent extension of the suspension or specific BIS authorization.