Foreign Direct Product Rule (FDPR)

In News

• Recently, the US Commerce Department is tightening export controls to limit China’s ability to get advanced computing chips, develop and maintain supercomputers, and make advanced semiconductors.

About The foreign direct product rule (FDPR)

• Background:
  • It was first introduced in 1959 to control trading of US technologies.
• Objective:
  • It essentially says that if a product was made using American technology, the US government has the power to stop it from being sold including products made in a foreign country.
• Significance of this law:
  • This application will stop advanced chip use in Chinese supercomputers which can be used to develop nuclear weapons and other military applications.
  • The United States had already placed a number of Chinese supercomputing companies on a restricted entity list, cutting them off from buying US chips. 
• Examples:
  • It was used against China telecom company Huawei Technologies Co Ltd in 2020.
    • American officials had tried to cut off Huawei’s supply of semiconductors but found that companies were still shipping Huawei chips made in factories outside the United States.
  • US regulators used it on Russia and Belarus after the invasion of Ukraine to cut off chips.  

Source: IE