On July 14, 2026, the U.S. Department of Commerce Bureau of Industry and Security ("BIS") published a final rule, titled Enhanced Favorable Treatment for the United Arab Emirates Under the Export Administration Regulations (the "UAE Rule"), that makes the UAE eligible for additional license exceptions under the Export Administration Regulations ("EAR") and identifies specific parties in the UAE that are eligible for License Exception Strategic Trade Authorization ("STA") and/or receipt of certain advanced computing items without a license or license exception.
Effective July 10, 2026, the UAE is no longer listed under the EAR's Country Groups D:3 or D:4 and has been added to EAR Country Group A:5. As a result, exports, reexports, and transfers of additional items to or within the UAE are now eligible for additional license exceptions, including license exceptions TMP, GOV, TSU, AVS, APR, and additional provisions of License Exceptions ACE and BAG. Further, the UAE is no longer subject to the end use restrictions applicable to rocket systems and certain unmanned aerial vehicles at EAR § 744.3(a)(1) and (3) or the missile systems-related restrictions on U.S. person services at EAR § 744.6(b)(2).
While License Exception STA is generally available for Country Group A:5, the UAE Rule limits this availability for the UAE to specific parties that are identified as eligible for the license exception in new Supplement No. 8 to EAR Part 740. Finally, although destinations outside of Country Groups D:1, D:4, or D:5 can generally receive advanced computing items without a license, subject to certain end use and end user restrictions, BIS will enforce a license requirement on exports, reexports, or transfers of those items to or within the UAE, unless all ultimate consignees and end users of the items in the UAE are listed in Supplement No. 8 to EAR Part 740 as eligible to receive such items without a license.
Prior to the UAE Rule, the UAE was eligible for license exceptions available to destinations in the EAR’s Country Group B, subject to certain restrictions that applied as a result of the UAE’s inclusion in Country Groups D:3 and D:4, particularly for items controlled on the Commerce Control List for chemical and biological weapons (CB) or missile technology (MT) reasons. Following implementation of the UAE Rule, additional items can now be exported, reexported, or transferred to or within the UAE under the following license exceptions or additional provisions of license exceptions, provided that the relevant criteria are met:
- License Exception Temporary Imports, Exports, Reexports, and Transfers (in-country) (TMP) now authorizes (i) exports, reexports, or transfers (in-country) to or within the UAE of MT-controlled commodities and software as tools of trade for use by the exporter or employees of the exporter; (ii) exports to the UAE of items that are controlled for national security (NS), nuclear proliferation (NP), CB, or MT reasons and moving in transit through the United States under a Transportation and Exportation (T.&E.) customs entry or an Immediate Exportation (I.E.) customs entry made at a U.S. Customs and Border Protection Office; and (iii) exports to the UAE of items controlled for NS, NP, CB, or MT reasons, that were imported into the United States for marketing or for display at an exhibition or trade fair, and were either entered under bond or permitted temporary free import under bond providing for their export and are being exported in accordance with the terms of that bond.
- License Exception Governments, International Organizations, International Inspections Under the Chemical Weapons Convention, and the International Space Station (GOV) is available for items controlled for MT reasons and, as a result of the UAE’s A:5 listing, now authorizes (i) reexports of commodities or software on the Sensitive List at Supplement No. 6 to EAR Part 774 by the International Atomic Energy Agency (IAEA) and Euratom for official international safeguard use in the UAE; and (ii) exports and reexports to the Organization for the Prohibition of Chemical Weapons (OPCW) and exports and reexports of “600-series” items by the OPCW for official international inspection and verification use under the terms of the Chemical Weapons Convention.
- License Exception Technology and Software—Unrestricted (TSU) is now available for items controlled for MT reasons.
- License Exception Baggage (BAG) authorizes shipments of unaccompanied baggage, including commodities controlled for CB, MT, NS, encryption (EI) or NP reasons.
- License Exception Aircraft, Vessels and Spacecraft (AVS) is now available for items controlled for MT reasons.
- License Exception Additional Permissive Reexports (APR) is now available for items controlled for MT reasons and authorizes certain reexports from Country Group A:1 to the UAE where the commodity being reexported is both controlled for national security reasons and not controlled for export to Country Group A:1.
- License Exception Authorized Cybersecurity Exports (ACE) authorizes certain exports, reexports, and transfers (in-country), including deemed exports and reexports, of certain cybersecurity items to government end users in the UAE.
Additionally, entities and their subsidiaries identified in new Supplement No. 8 to EAR Part 740 as eligible for License Exception STA, currently including Amazon, Apple, Google, Meta, Microsoft, OpenAI, Oracle, and X.AI, are eligible to receive items in the UAE pursuant to that license exception. Likewise, government agencies of the UAE, including the Ministry of Defense and Armed Forces, are eligible to receive items under License Exception STA. However, License Exception STA is not generally available for the destination of the UAE, or for UAE state-owned corporations or contractors or grantees of UAE government agencies.
The UAE Rule also created a process for other parties in the UAE to seek approval to become authorized for use of License Exception STA and/or exports of advanced computing items without a license (as discussed in the following section) by submitting an Advisory Opinion request. The Rule states that the Commerce Secretary, in consultation with the Secretary of State and the Assistant to the President for National Security Affairs, will decide such requests within 30 days, and will notify the applicant within 5 days thereafter.
Background. As background, during the final days of the Biden Administration, effective January 13, 2025, BIS expanded the regulatory jurisdiction of the EAR to apply to all ECCN 3A090 chips and certain related items produced anywhere in the world when there is a U.S. nexus that meets the criteria of the EAR’s Advanced Computing Foreign Direct Product rule, and imposed a worldwide license requirement on the export, reexport, and transfer (in-country) of ECCN 3A090.a chips (including advanced GPUs for AI model training and inference) and certain related items. The license requirement applicable to ECCN 3A090.b chips and certain related items continued to apply to exports, reexports, and transfers (i) to or within China, Macau, and other destinations in Country Groups D:1, D:4 (which, prior to the UAE Rule, included the UAE), and D:5 that are not also specified in Country Groups A:5 or A:6; or (ii) that were destined for parties outside of those jurisdictions and headquartered, or with an ultimate parent headquartered, in Country Group D:5 (including China) or Macau. These changes were implemented via an Interim Final Rule titled “Framework for Artificial Intelligence Diffusion” (the “AI Diffusion Rule”), which also included a delayed compliance date of May 15, 2025 to allow industry time to come into compliance with the AI Diffusion Rule and introduced certain other changes to the EAR, including adding certain license exceptions.
On May 13, 2025, the Trump Administration announced plans to rescind the AI Diffusion Rule and replace it with different controls. Further, the U.S. Under Secretary of Commerce for Industry and Security, Jeffrey Kessler, instructed BIS enforcement officials not to enforce the AI Diffusion Rule while it remains part of the EAR. To date, the AI Diffusion Rule has not yet been legally rescinded and new regulations to replace the AI Diffusion Rule have not yet been promulgated.
In practice, BIS is enforcing the worldwide destination-based license requirement on ECCN 3A090.a chips only as it applied prior to January 13, 2025, i.e., to all exports, reexports, and transfers of those chips to Macau or countries specified in the EAR’s Country Groups D:1, D:4, and D:5 that are not also specified in Country Groups A:5 or A:6. Additionally, it is reading the end use license requirement that applies to ECCN 3A090.b chips when destined for companies outside of Country Groups D:1, D:4, or D:5 that are headquartered, or have an ultimate parent company headquartered, in Country Group D:5 (including China) or Macau as also applying to the export, reexport, or transfer of ECCN 3A090.a chips. BIS’s explanation of how the end use license requirement maps to the current text of the EAR is set forth in BIS’s May 31, 2026 guidance.
Further, on May 13, 2025, BIS announced a policy determination that providing access to advanced computing integrated circuits and commodities—including most advanced GPUs—that are subject to the EAR for the purpose of training AI models has the potential to enable military-intelligence end uses or end users and weapons of mass destruction (“WMD”) end uses in Country Group D:5 countries (including China) or Macau, such that a license requirement may apply to the following activities involving advanced GPUs “when there is ‘knowledge’ . . . that the AI model will be used for a WMD or military-intelligence end use/user”:
- Exports, reexports, or transfers to any party with knowledge, including reason to know, that the items will be used to conduct training of AI models for or on behalf of parties headquartered in Country Group D:5 (including China) or Macau; or
- The provision by a U.S. person of support or the performance of any contract, service, or employment, when there is knowledge, including reason to know, that such activity will be used for or may assist the training of AI models for or on behalf of parties headquartered in Country Group D:5 (including China) or Macau.
Accordingly, it is prudent for exporters, reexporters, and transferors to conduct diligence prior to shipping, selling, or transferring advanced GPUs to confirm that, to the extent they have reason to know that the GPUs will be for use in any training of AI models for or on behalf of parties headquartered in Country Group D:5 (including China) or Macau, such training will not be for WMD or military-intelligence end uses or end users.
UAE Final Rule. As relevant to transactions involving advanced computing items, the UAE Rule (i) clarifies that BIS will rely on the worldwide license requirement applicable to ECCN 3A090.a and related items, which remains in the text of the EAR as a result of the AI Diffusion Rule, to continue to impose a destination-based license requirement on those items when destined to the UAE, subject to a carve-out for specific parties (discussed further in the next paragraph); (ii) amends the destination-based license requirement applicable to ECCN 3A090.b and related items to also apply to the UAE, subject to the same exception for specific parties that applies to ECCN 3A090.a; and (iii) confirms that the exception to allow certain license-free exports, reexports, and transfers of advanced computing items to specific parties in the UAE does not overcome the end use and end user license requirements in EAR Part 744, such that exports, reexports, or transfers destined to parties headquartered, or with an ultimate parent headquartered, in Country Group D:5 (including China) or Macau or for use in the training of AI models for or on behalf of parties headquartered in Country Group D:5 (including China) or Macau for WMD or military-intelligence end uses or end users would continue to require a license.
In addition, the UAE Rule adds Supplement No. 8 to EAR Part 740, which identifies ultimate consignees and end users in the UAE that may receive advanced computing items without a license, as well as ultimate consignees and end users that are eligible for License Exception STA. The destination-based license requirement applicable to ECCN 3A090.b and related items at EAR 742.6(a)(6)(iii)(B) was revised to confirm that “a license is not required when the ultimate consignee and all end users are approved entities in the UAE listed in supplement no. 8 to part 740 and specified as approved to receive the items covered” by that license requirement (emphasis added). Although no revisions were made to the worldwide license requirement applicable to ECCN 3A090.a and related items at EAR 742.6(a)(6)(iii)(A), Supplement No. 8 references both paragraphs (A) and (B) and it appears from the preamble to the UAE Rule that the same text will be used to define the scope of the carve-out for ECCN 3A090.a and related items.
Currently, Supplement No. 8 to EAR Part 740 authorizes the UAE Government and two UAE-based entities, Group 42 Holding Ltd d/b/a G42, including G42 Cloud Technology LLC, and Core42 Technology Projects LLC d/b/a Core42, to receive advanced computing items without a license when they are the ultimate consignees or end users of those items in the UAE. However, BIS has stated that those authorizations will automatically expire on April 6, 2027, unless those entities become U.S. companies prior to that date.
Additionally, as noted above, several U.S.-headquartered companies—Amazon, Apple, Google, Meta, Microsoft, OpenAI, Oracle, and X.AI—are authorized to receive advanced computing items in the UAE without a license, and also are eligible for License Exception STA. BIS also indicated that the UAE entity MGX will be subject to a favorable license review policy.
The UAE Rule also creates a process for other parties in the UAE to seek approval to become authorized for exports of advanced computing items without a license and/or use of License Exception STA by submitting an Advisory Opinion request.
* * *
We are closely monitoring developments concerning U.S. export controls and will issue further updates in the event of material developments. In the meantime, we would be happy to address any questions you may have.
Covington’s International Trade Controls team—which includes lawyers in the firm’s offices in the United States, London, and Frankfurt—regularly advises clients across business sectors and would be well-placed to provide support in connection with these new export controls developments. Our trade controls lawyers also work regularly with Covington's Global Public Policy team—consisting of over 120 former diplomats and policymakers in the United States, Europe, the Middle East, Latin America, Africa, and Asia—many of whom have had substantial government experience in sanctions and export controls matters, and who regularly advise our clients on emerging sanctions policy matters and related engagements with government stakeholders.
If you have any questions concerning the material discussed in this client alert, please contact the members of our International Trade Controls practice.
Back
