U.S.-based electronic components distributor Arrow Electronics announced on Saturday, October 18, that the U.S. government was reversing trade restrictions previously placed on several of its China-based affiliates. These entities had been added to the U.S. Commerce Department's Entity List for allegedly facilitating the sale of American-made components that were subsequently found in weaponized drones utilized by Iran-backed groups, such as the Houthis, in the Middle East.

The restrictions were initially imposed on October 8, with Arrow Electronics Trading Co and another Arrow entity, along with six aliases in Hong Kong, being publicly added to the Commerce Department's Entity List via a Federal Register posting. The Commerce Department cited that U.S. components traced to sales tied to these Arrow-related entities had been recovered from drones operated by Iran-backed groups and their debris across the Middle East since 2017. Inclusion on the Entity List mandates licenses for exporting goods and technology to listed companies, which are typically denied, reflecting concerns over U.S. national security and foreign policy interests.

Upon the initial listing, Arrow Electronics affirmed its full compliance with all U.S. laws and regulations and engaged in discussions with the Commerce Department regarding the listings. A significant clarification made by Arrow spokesperson John Hourigan was that one of the units named in the original notice, "Arrow Electronics Co. Ltd.," is not actually connected to the company, appearing to be a "copycat using a similar name." However, the six aliases tied to the Hong Kong company in the Federal Register posting are indeed affiliated with Arrow and are among those slated for removal.

The reversal follows a notification from a Bureau of Industry and Security (BIS) official, with the Commerce Department confirming its intent to publish the removal in the U.S. Federal Register soon. In the interim, Arrow received an official letter authorizing the company to resume shipping to and from these entities under the same conditions that applied prior to October 8. A letter seen by Bloomberg News further specified a temporary authorization allowing Arrow to export, reexport, or transfer quantities no greater than 110% of the items transferred during the 120-day period preceding the entity listing. This temporary measure is valid until February 14 or until the publication of the official entity removal in the Federal Register.

"We have received official communication from the U.S. Commerce Department," stated Arrow spokesman John Hourigan in an email, confirming, "Arrow is authorized to resume shipping to and from these entities under the same conditions that applied prior to October 8." A spokesperson for the Commerce Department's Bureau of Industry and Security also commented, asserting that "BIS is committed to ensuring that export restrictions are appropriately targeted to protect national security."

It is uncommon for U.S.-based firms to appear on the Entity List. Arrow Electronics, a Centennial, Colorado-based company with global 2024 sales of $28 billion, had faced similar scrutiny as early as 2020 when an Asian subsidiary was suspected of providing technology to foreign military forces, a description Arrow had then denied as an error. The current removal underscores the dynamic nature of trade restrictions and the importance of accurate corporate affiliation.