BIS Affiliates Rule Suspended for One Year: Interim Compliance Steps
November 3, 2025 | Author: Hdeel Abdelhady
The Affiliates Rule in Brief
The Commerce Department Bureau of Industry and Security’s (BIS) long-awaited “Affiliates Rule” took effect on September 29, 2025. Under the Affiliates Rule, entities are subject to the export restrictions and licensing conditions applicable to their owners if owned 50% or more by one or more entities on the Entity List or Military End-User List, or by Specially Designated Nationals (SDNs) identified pursuant to certain sanctions programs under 15 C.F.R. § 744.8.
In addition, the Affiliates Rule creates new Red Flag no. 29. Red Flag no. 29 imposes on exporters, reexporters, and in-country transferors an obligation to determine percentage ownership of an export transaction party where there is “knowledge” that the export transaction party is owned by one or more listed entities or their 50% or more owned entities in the ownership chain. Where an exporter, reexporter, or in-country transferor cannot determine that ownership is less than 50%, BIS requires the submission of a license application.
These and other provisions of the Affiliates Rule substantially expand export compliance obligations that will be difficult to meet, as ownership information is often not public or accessible, and will not reliably be contained in screening software.
One-year Suspension of Affiliates Rule: Scope of Suspension Unclear
On November 1, 2025, the White House announced a temporary reprieve, but the scope of that suspension remains unclear. As of November 3, 2025, the Commerce Department has not issued a rule, guidance, or statement formalizing or explaining the suspension. BIS is expected to act on or before November 10, 2025, to give the announcement legal effect.
According to a White House fact sheet on the results of the most recent bilateral U.S.-China trade talks, the United States will “suspend” implementation of the Affiliates Rule for one year, starting on November 10, 2025. Therefore, compliance with the Affiliates Rule is required through November 9, 2025.
A key open question is whether the one-year suspension applies globally, or only to Chinese entities subject to the Affiliates Rule. It is expected that the U.S. Government will clarify this point soon.
Interim Compliance Considerations for Exporters, Reexporters, and In-Country Transferors
Given the scale of the Affiliates Rule and its corresponding compliance burden, the one-year suspension gives companies time to plan for compliance once the suspension ends—or sooner, if implementation proceeds for non-Chinese entities.
In addition to the compliance considerations set forth in Hdeel Abdelhady‘s update on the Affiliates Rule, U.S. and foreign parties engaged in exports subject to the Export Administration Regulations should consider these steps:
- Monitor suspension developments. This one is obvious. Exporters should proactively monitor BIS or other issuances clarifying the scope of the one-year suspension, and any other matters.
- Plan for Regulatory Changes, Including Earlier Implementation of the Affiliates Rule. Those familiar with U.S.-China trade developments in the first and second Trump Administrations will know that the terms of negotiated trade deals may unravel or change, in part or otherwise. Exporters should not assume that the one-year suspension of the Affiliates Rule will remain in effect for one year. Nor should they assume that the suspension’s scope — applicable to China or globally — will remain constant.
- Do Not Rule Out Post-Suspension Affiliates Rule Changes. Even if the one-year suspension — applicable to China or globally — goes into effect and remains in effect for one year, exporters should not assume that the rule, at the end of the suspension period, will remain the same. As a general matter, regulations change, particularly those — like export controls — that are based on U.S. national security and foreign policy goals. The potential for change is elevated here, where the Trump Administration has suspended the Affiliates Rule as a reciprocal trade measure, to achieve a trade deal, rather than because underlying national security or foreign policy goals (separate from trade facilitation on desired terms) have changed.
- Canvass Software and Other Tools, But With Appropriate Resource Expenditure. Some screening software providers have marketed their products for Affiliates Rule compliance. However, ownership data is often not public or accessible. The suspension period provides an opportunity for exporters to evaluate available software tools, request demos or trials, and determine how best to allocate resources for compliance when the rule resumes—whether for China-specific or global implementation. The suspension period also provides time for exporters to consider how to best allocate their internal and external resources to Affiliates Rule compliance, when implementation of the rule resumes with respect to China (or globally if the suspension applies across the board). Exporters should consider calibrating their resource expenditure in taking these steps, considering that the one-year suspension is not guaranteed to last one year, the scope of the suspension is unclear, and the Affiliates Rule may change when implementation resumes.
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