US Says It Will Delay BIS 50% Rule for 1 Year
The U.S. will suspend the Bureau of Industry and Security’s 50% rule for one year in exchange for Beijing postponing its export restrictions on rare earths for one year, the two sides announced Oct. 30.
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The U.S. is “going to be suspending” the BIS rule “for a year in return for the suspension on the rare earth licensing regime," Treasury Secretary Scott Bessent said in an Oct. 30 interview with Fox Business. “What's important to note here is that it was China versus the world. China put, or threatened to put, this licensing regime on the entire world,” he said. “And President Trump, as the leader of the free world, negotiated this deal for everyone.”
A White House official later confirmed the BIS rule will be postponed for one year.
China’s Ministry of Commerce also confirmed the agreement, saying that it will suspend its rare earth controls (see 2510100045) “for one year and will study and refine specific plans.” China is “willing to work with the United States to jointly safeguard and implement the important consensus reached at the meeting between the two heads of state,” a ministry spokesperson said, according to an unofficial translation.
The White House official said China agreed to issue general licenses -- valid until Nov. 27, 2026 -- to allow exports of rare earths, such as gallium, germanium, antimony, and graphite, "for the benefit of U.S. end users and their suppliers around the world."
The BIS 50% rule, released and effective Sept. 29, extended BIS Entity List and Military End-User List restrictions -- including certain restrictions applied to sanctioned parties -- to affiliates majority-owned by entities on those lists (see 2509290017).
The suspension, announced after a meeting between Trump and Chinese President Xi Jinping in South Korea, came as a surprise to some U.S. exporters and other companies, many of which had spent the last month scrambling to get into compliance with the new restrictions and making decisions on whether to purchase expensive restricted-party screening tools and services.
The U.S., by our press time, didn’t announce when it planned to officially postpone the 50% rule, known as the Affiliates Rule. BIS didn’t respond to questions about when the suspension will officially take effect and whether it plans to issue new guidance to industry. The White House official said: "Further implementation details to come."
The announcement came one day after the public comment period for the Affiliates Rule closed. Some companies and trade groups asked BIS to delay the rule, including the Aerospace Industry Association, which asked for a 180-day delay “to allow industry additional time for comprehensive ownership analysis while maintaining business operations that pose minimal diversion risk.” AIA added that the “immediate implementation” of the rule and its 30-day comment period “limits the extent of accurate information industry can collect while simultaneously adjusting and enhancing their existing compliance systems.”
Some trade groups applauded the suspension. U.S.-China Business Council President Sean Stein called it "especially welcome news."
"We applaud both presidents for these important breakthroughs," Stein said. “We hope that future negotiations will address long-standing market access barriers, help level the playing field for U.S. companies, and bring long-term predictability to the bilateral trade relationship.”