What is the foreign direct product rule?
The foreign direct product rule is a U.S. export control on certain items produced outside the United States. It makes them subject to U.S. export regulations when they are made with specified American technology or software, or with equipment derived from it.
Also known as: FDPR, FDP rule, foreign-produced direct product rule
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How it works
The Export Administration Regulations (EAR) can apply to U.S.-origin items wherever they are. Foreign-made items fall under them in two ways, the Commerce Department's Bureau of Industry and Security (BIS) explained in a 2020 rule. They contain a certain percentage of controlled U.S. content, or the foreign direct product (FDP) rule applies.
The regulation says a foreign-produced item located abroad is subject to the EAR when it is a direct product of specified technology or software. So is an item made by a plant, or a major component of a plant, that is itself such a product. A major component is equipment essential to production, including testing equipment.
Several FDP rules exist. Each pairs a product test with a destination or end-user test. BIS consolidated them in one section in February 2022. As of October 2026 these include rules for Entity List companies, Russia and Belarus, Iran, advanced computing chips, supercomputers and chipmaking equipment. Coverage alone does not require a license.
Why it matters
The 2020 rule, effective that May 15, applied the approach to Huawei and its listed non-U.S. affiliates. Consider a chip made abroad to a Huawei design and destined for the company. It became subject to the EAR if equipment essential to producing it was itself a direct product of specified U.S. technology or software.
In October 2022, BIS added FDP rules for advanced computing chips and supercomputers and widened the Entity List rule for 28 already-listed entities in China. A rule effective December 2, 2024 created two more covering foreign-made chipmaking equipment. BIS wrote that Chinese entities of concern had kept buying foreign-made equipment produced with U.S. technology, software or tools.
Where things stand in 2026
A rule published on September 30, 2025 extended Entity List restrictions and FDP rules to companies owned 50 percent or more by listed parties. BIS stayed it from November 10, 2025 until November 9, 2026. Treasury Secretary Scott Bessent said on September 23, 2026 that a U.S.-China trade truce would be extended to January 10, CNBC reported. Export Compliance Daily, a trade publication, reported two days later that the suspension would be extended with it, citing an unnamed U.S. official. It said BIS had not responded when asked about a formal notice. As of October 6, 2026, the regulation text on Cornell's Legal Information Institute site still showed the stay ending November 9, 2026.
Sources
- 15 CFR § 734.9 - Foreign-Direct Product (FDP) Rules, Legal Information Institute, Cornell Law School
- Export Administration Regulations: Amendments to General Prohibition Three (Foreign-Produced Direct Product Rule) and the Entity List, Federal Register (Bureau of Industry and Security)
- Foreign-Direct Product Rules: Organization, Clarification, and Correction, Federal Register (Bureau of Industry and Security)
- Implementation of Additional Export Controls: Certain Advanced Computing and Semiconductor Manufacturing Items; Supercomputer and Semiconductor End Use; Entity List Modification, Federal Register (Bureau of Industry and Security)
- Foreign-Produced Direct Product Rule Additions, and Refinements to Controls for Advanced Computing and Semiconductor Manufacturing Items, Federal Register (Bureau of Industry and Security)
- One Year Suspension of Expansion of End-User Controls for Affiliates of Certain Listed Entities, Federal Register (Bureau of Industry and Security)
- U.S.-China trade truce extended for two months, Bessent says, as Xi begins state visit, CNBC
- US-China Trade Truce, Including BIS Affiliates Rule, Extended 2 Months, US Says, Export Compliance Daily
