Executive Summary
- What’s new: Effective November 9, 2026, BIS extended its suspension of the Affiliates Rule through January 10, 2027. The Affiliates Rule imposes export restrictions on certain foreign entities owned by listed parties.
- Why it matters: Without the extension, the suspension would have ended on November 9, 2026. The extension lasts for approximately two months and does not withdraw or modify the Affiliates Rule. Absent further BIS action, the Affiliates Rule’s license requirements and related changes to the Export Administration Regulations will go into effect January 10, 2027.
- What to do next: Companies should treat the extension as a brief reprieve and prepare compliance programs for potential reimposition of the Affiliates Rule in early 2027.
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On November 9, 2026, the Department of Commerce’s Bureau of Industry and Security (BIS) published a final rule in the Federal Register extending the suspension of its September 2025 interim final rule, “Expansion of End-User Controls to Cover Affiliates of Certain Listed Entities” (the Affiliates Rule). The one-year suspension that BIS imposed in November 2025 was set to end on November 9, 2026. The new final rule further stays the Affiliates Rule until January 10, 2027.
Background
As we discussed in a previous client alert, in late September 2025 BIS released the Affiliates Rule, which extended Entity List and Military End User (MEU) List restrictions — as well as restrictions applicable to certain parties designated by the Department of the Treasury’s Office of Foreign Assets Control (OFAC) and identified in Section 744.8(a)(1) of the Export Administration Regulations (EAR) — to non-U.S. entities owned 50% or more, directly or indirectly, individually or in aggregate, by such listed parties. The Affiliates Rule also introduced a new red flag imposing an affirmative duty on exporters to resolve ownership questions where a foreign party is known to be partially owned by a listed entity. China has been critical of the Affiliates Rule because of the large number of Chinese companies on the Entity List and MEU List and the effect it is expected to have on their affiliates.
Following U.S.-China trade negotiations, BIS published a final rule titled “One Year Suspension of Expansion of End-User Controls for Affiliates of Certain Listed Entities,” which suspended the Affiliates Rule in its entirety through November 9, 2026. The suspension provided for reimposition of the Affiliates Rule’s license requirements and related provisions in the EAR effective November 10, 2026.
Summary of the Extension
The new final rule is brief and narrow in scope. While the rule does not explain BIS’s rationale for the extension, Treasury Secretary Scott Bessent and other administration officials have indicated that the extension is tied to the “Busan agreement” on trade issues between the U.S. and China, which was also extended to January 10, 2027. Key features include:
- Duration: The suspension, previously set to end on November 9, 2026, is extended through January 10, 2027. The rule took effect on November 9, 2026, the date of publication, ensuring there was no gap between the original suspension and the extension.
- Scope: The rule does not alter the substance of the Affiliates Rule, and merely extends the suspension.
- Public comments: The rule does not consider public comments received on the Affiliates Rule. BIS states that those comments will be considered in connection with subsequent rulemakings.
Implications for Industry
The two-month extension preserves the status quo but leaves considerable uncertainty, as it is tied to the two-month extension of the U.S.-China trade truce announced in late September 2026. Companies involved in the export, reexport or transfer (in-country) of items subject to the EAR should consider using the remaining period to assess and mitigate the effect of the reimposition of the Affiliates Rule on their businesses:
- Rescreen existing customers, suppliers, distributors and other counterparties for ownership of 50% or more, individually or in aggregate, by parties on the Entity List, MEU List and/or the SDN List.
- Address ownership visibility gaps, including by seeking ownership information directly from counterparties where public or vendor data is insufficient.
- Review contractual clauses and terms to ensure they can accommodate reimposition of the Affiliates Rule.
- Establish or refresh internal red-flag procedures for counterparties with significant minority ownership by, or other significant ties to, listed parties.
- Monitor the Federal Register for further BIS action ahead of January 10, 2027.
We will continue to monitor developments and provide updates as BIS takes further action.
This memorandum is provided by Skadden, Arps, Slate, Meagher & Flom LLP and its affiliates for educational and informational purposes only and is not intended and should not be construed as legal advice. This memorandum is considered advertising under applicable state laws.