Removal from the BIS Entity List: Process, Cases and Strategy for Chinese Companies

Being added to the US Bureau of Industry and Security (BIS) Entity List is one of the most disruptive events a Chinese company can face. The listing itself does not prohibit US trade in absolute terms, but it imposes a licence requirement for all items subject to the Export Administration Regulations (EAR), including in most cases even EAR99 items such as a US-made pencil, and it typically carries a presumption of denial. For a company that depends on US-origin components, software, technology or foreign-made items caught by the Foreign Direct Product (FDP) rules, remaining on the list is rarely a viable long-term option. The good news is that BIS maintains an administrative mechanism for removal. This article explains the four-step removal process under the EAR, the three categories of argument that tend to carry weight, and the real-world cases, including ZTE and Arrow Electronics, that show how delisting actually works in practice.

The legal framework: why the Entity List matters and who decides#

The Entity List is Supplement No. 4 to 15 C.F.R. Part 744. Under Section 744.11 of the EAR, BIS may add a person, or even a single address, to the list when there is reason to believe, based on specific and articulable facts, that the person has been involved, is involved, or poses a significant risk of becoming involved in activities contrary to US national security or foreign policy interests. The relevant decision-maker is the End-User Review Committee (ERC), which is composed of representatives from the Departments of Commerce, State, Defense, Energy and, when appropriate, Treasury. BIS implements the ERC's decisions.

Every Entity List entry carries a citation to the Federal Register rule that first added or later modified the listing. Those rules rarely provide much detail, but they are a necessary starting point. For example, when Inspur Group Co., Ltd. was added to the Entity List on March 6, 2023, the Federal Register rule stated that the listing was based on the company "acquiring and attempting to acquire U.S.-origin items in support of China's military modernization efforts," conduct that was deemed contrary to US national security and foreign policy interests. Even a single sentence of allegations can help counsel identify which facts the government relied on and where the challenge should focus.

Case study one: ZTE and the 2017 settlement-linked removal#

The most instructive large-scale example remains ZTE. In March 2017, BIS removed Zhongxing Telecommunications Equipment Corporation and ZTE Kangxun Telecommunications Ltd. from the Entity List. That removal followed a record-breaking settlement under which ZTE agreed to pay US$661 million to resolve claims of unlawful exports of US items to sanctioned countries, including Iran and North Korea. The removal eliminated the licence requirements for exports, re-exports and in-country transfers to ZTE.

The ZTE case illustrates a pattern that recurs in delisting practice: removal is often accompanied by a compliance settlement, and the same action can both remove and add parties. BIS simultaneously added former ZTE CEO Shi Lirong to the Entity List, imposing a licence requirement for all items subject to the EAR and a review policy of presumption of denial. For counsel, the lesson is that the ERC's decision must be read as a whole: a removal for the entity and a designation for an individual can arrive in the same Federal Register notice, and the strategic response has to account for both.

Case study two: Arrow Electronics and the nine-day reversal#

Not every removal takes months or years. In October 2025, Arrow Electronics announced that several of its China- and Hong Kong-based entities had been removed from the Entity List just nine days after their initial designation. The rapid reversal followed clarification that at least one listed entity was not affiliated with Arrow Electronics, Inc. at all. BIS issued a temporary authorization to allow continued trade of specific ECCNs during the transition.

The Arrow case is a reminder of two practical points. First, misidentification happens, and a fast, accurate response can correct it quickly. Second, even during a short listing window, a temporary authorization may be needed to keep trade flowing. Companies that maintain up-to-date entity-level records, including corporate affiliation charts and name variants, are in a much stronger position to act fast when a mistaken listing occurs.

Step one: investigate why the listing was made#

Before filing anything, counsel must determine why the entity was added. The Federal Register citation in the entry is the starting point. The inquiry should cover the transaction history, ownership and control chain, end users and end uses that may have drawn scrutiny, and any prior enforcement contact. For affiliates captured "constructively" under the BIS 50 Percent Rule (the Affiliates Rule), the same analysis applies to the parent entity's listing basis, because the government's concerns about the listed parent frequently shape its view of affiliates.

Step two: initiate removal or modification with the ERC#

A formal removal request is made in writing to the ERC under Section 744.16(e) of the EAR. Counsel should also consider submitting a Freedom of Information Act (FOIA) request for the administrative record underlying the ERC's decision, either before or alongside the removal request. The record is often heavily redacted and can take considerable time to arrive, but it is frequently the only way to see what the government actually relied on.

The written request, and any follow-up submissions, must give well-formulated reasons for removal. In practice, arguments fall into three categories:

• Challenging the factual or legal basis. The petitioner may argue that the reasons for the listing were materially incorrect or legally insufficient. This is a high bar: courts apply a rational basis standard, meaning the petitioner must show there is no rational relationship between the Entity List decision and some legitimate governmental purpose. See Federal Express v. U.S. Dept. of Commerce, 486 F. Supp. 3d 69, 76 (D.D.C. 2020).
• Demonstrating changed circumstances. The petitioner may show that the circumstances that prompted the listing no longer apply: the original risks have been remedied and are unlikely to recur, for example through personnel changes, divestment, or a change in the relevant facts. For unlisted affiliates seeking modification of a parent's entry, changed circumstances (such as completed divestiture) are one of the few viable routes.
• Taking a cooperative and corrective stance. The petitioner may commit to specific corrective measures: new compliance controls, revised corporate governance, enhanced screening, or divestment of the problematic interest. This category is frequently combined with the first two.

Because the petitioner often lacks the full administrative record at the outset, the process should be treated as iterative. As the record arrives and the government's apparent rationale becomes clearer, counsel should refine and supplement the arguments.

Step three: wait for the ERC decision#

The removal process can be lengthy. The ERC evaluates the petition through extended correspondence, requests for information and review of the administrative record. Decisions are made in accordance with the procedures in Supplement No. 5 to Part 744, which the ERC chairs and which requires a unanimous vote of the participating representatives for removal or modification. When a decision is reached, BIS communicates the outcome to the petitioner in writing and publishes a formal notice in the Federal Register. Recent examples of China-related removals include the November 2023 removal of the Ministry of Public Security's Institute of Forensic Science of China and the November 2025 removal of an entity and six aliases based on commitments to enhance export compliance measures.

Step four: what happens after a denial#

A denial by the ERC constitutes final agency action; there is no further administrative appeal within BIS or any other federal agency. The remaining avenue is judicial review in federal court. Here the law differs sharply from OFAC SDN delisting litigation. Under the Export Control Reform Act of 2018 (ECRA), which is the statutory authority for the EAR, judicial review of Entity List determinations is not subject to the Administrative Procedure Act's standard for "arbitrary and capricious" action. See Changji Esquel Textile Co. v. Raimondo, 40 F.4th 716 (D.C. Cir. 2022) and 50 U.S.C. Section 4821(a).

That does not completely foreclose judicial review. A petitioner may still raise claims under the Due Process Clause of the Fifth Amendment, or argue that the agency's action exceeded its statutory authority (ultra vires). Courts are historically deferential in national security and foreign policy matters, but the post-Loper Bright environment, after the Supreme Court's decision in Loper Bright Enterprises v. Raimondo, may reshape deference in future challenges. Counsel should evaluate the litigation route early, because the administrative remedies are exhausted at the point of denial.

Practical checklist for Chinese companies#

• Keep entity-level records current: corporate structure, ownership percentages, name variants and address details, because the Affiliates Rule can "constructively" list subsidiaries of a listed parent.
• Preserve the Federal Register citation from the listing and monitor BIS's End-User Review Committee announcements.
• Consider a FOIA request for the administrative record early; the timeline for the record can exceed the timeline for the petition itself.
• Prepare a written case plan that addresses all three argument categories and document any corrective measures already taken.
• Coordinate with Chinese counsel on countermeasure and data requirements before sending information to US agencies or counsel, so that the response does not create a separate conflict under Chinese law.

Entity List removal is difficult but attainable. The ERC has removed Chinese entities on multiple occasions, including through settlement-linked removals, corrected-identification reversals and compliance-commitment-based removals. Success depends on an accurate factual record, disciplined procedure and a strategy that anticipates the government's rationale rather than merely asserting that the listing was wrong.

This article is for general information only and does not constitute legal advice. Listing, licensing and delisting rules change frequently; consult qualified counsel for the current state of the law.