The Foreign-Produced Direct Product Rule (FDPR) was first implemented in 1959 to control transfers of foreign manufactured items made with U.S. technology for national security purposes, and the rule remained largely stagnant until recent years. Today, the FDPR has become a go-to tool for regulators to extend the reach of U.S. export controls far beyond our borders to cripple foreign production of and access to sensitive technologies.
This trend famously began in 2020, when the FDPR was used to choke off Huawei’s supply of foreign-produced semiconductors. In early 2022, the FDPR was further expanded to encompass Russian and Belarussian entities and military end users, blocking access to a broad range of items, in an attempt to limit Russia’s military capabilities.
Late 2022 saw perhaps the most impactful use of the FDPR, when a pair of companion rules was issued to significantly restrict China’s ability to access and produce advanced computing, semiconductor and supercomputing technology. Most recently, in 2023, the FDPR was again used to target Russia’s military capabilities, adding restrictions on certain foreign-produced EAR99 items and adding restrictions against Iran, in an attempt to curb Iran’s production of unmanned aerial vehicles (UAVs, or drones) used by Russia.
Join us to learn about the expanded controls under the FDPR that are significantly impacting U.S. and foreign companies that are directly or indirectly doing business with China, Russia, Belarus and Iran.
You will learn about how federal regulators are strategically using the FDPR, with an outlook for what may be next, including enforcement—April of 2023 saw the largest standalone administrative penalty ever issued by the Bureau of Industry and Security, which was for a FDPR violation. You will also gain insight on compliance risk mitigation strategies for doing business in this complex, high-stakes and dynamic environment.
- Ajay Kuntamukkala, Partner, Hogan Lovells
- Josh Gelula, Counsel, Hogan Lovells