FDPR (Foreign Direct Product Rule)

Model Diplomat Research Team · Last reviewed June 22, 2026

TL;DR

A U.
S.
Does the FDPR apply even if no U.S. company is involved in the transaction?
How do allies avoid being caught by the FDPR?
Is the FDPR legal under international law?

Updated June 22, 2026

A U.S. export-control rule that extends American jurisdiction to foreign-made goods if they are produced using U.S. technology, software, or equipment.

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In May 2020, the U.S. Commerce Department expanded the FDPR to bar TSMC and other foreign foundries from shipping chips made with U.S. tools to Huawei, severing the Chinese firm's access to advanced semiconductors.

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The Foreign Direct Product Rule (FDPR) is a provision of the U.S. Export Administration Regulations (EAR), administered by the Bureau of Industry and Security (BIS) within the Department of Commerce. It allows Washington to control the export, reexport, or in-country transfer of items produced outside the United States when those items are the "direct product" of specified U.S.-origin technology or software, or when they are made by a plant whose major equipment is itself a direct product of U.S. technology.

The rule effectively projects U.S. export-control jurisdiction extraterritorially. Even a chip designed in Taiwan and fabricated in South Korea can fall under U.S. licensing requirements if U.S. design software (such as EDA tools) or U.S.-built lithography equipment was used at any stage.

The FDPR rose to global prominence in two episodes:

Huawei (2020): BIS amended the FDPR to cut Huawei and its affiliate HiSilicon off from foreign-fabricated semiconductors made with U.S. tools, crippling its smartphone and 5G business.
Russia (February 2022): Following the invasion of Ukraine, the Biden administration applied a Russia/Belarus FDPR to restrict advanced electronics, aerospace, and defense-related exports. Partner countries that adopted substantially equivalent controls (EU, UK, Japan, South Korea, others) were exempted from the rule's broadest reach.
Advanced computing and China (October 2022, expanded October 2023): BIS imposed an FDPR targeting advanced semiconductors, AI chips, and semiconductor manufacturing equipment destined for China.

Critics argue the FDPR strains alliance relations, incentivizes "de-Americanization" of foreign supply chains, and tests the limits of extraterritorial jurisdiction under international law. Supporters view it as the most effective lever Washington has to enforce technology controls without requiring multilateral consensus. For MUN delegates and IR researchers, the FDPR is a central case study in weaponized interdependence, economic statecraft, and the contest over semiconductor supply chains.

Frequently asked questions

Does the FDPR apply even if no U.S. company is involved in the transaction?

Yes. The rule can apply to a sale between two non-U.S. parties if the item was produced using controlled U.S. technology, software, or equipment, which is what makes it extraterritorial.

How do allies avoid being caught by the FDPR?

BIS typically exempts countries that adopt substantially equivalent export controls. After the 2022 Russia FDPR, EU member states, the UK, Japan, South Korea, and others received exemptions on that basis.

Is the FDPR legal under international law?

It is contested. The U.S. asserts jurisdiction based on the nationality of the technology, but many states and scholars argue this exceeds customary limits on extraterritorial jurisdiction. No binding ruling has resolved the question.