Comment Deadline Extended: Export Controls on Emerging Technologies

*This is an updated version of the December 10th blog post.

Key Takeaways:

  • Emerging technology sectors are being reviewed now for new export controls that could take effect in 2019 (list below).
  • You may submit comments on the criteria the U.S. government will use to determine what technologies are subject to export controls.
  • The deadline for comments has been extended to January 10, 2019.
  • We can help.

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The Traps of a CFIUS Like EU FDI Screening Mechanism

Finally, the much awaited harmonized screening framework of foreign investments into the EU (Regulation 2017/0224) has been agreed upon on 20 November 2018 by the EU Parliament, the Council and the Commission.

The agreed package will ensure that the EU and its Member States are equipped to protect their “essential interests” while remaining “one of the most open investment regimes” in the world. Protecting an open economy may sound like a comical oxymoron, but the press release of the European Commission on this topics does make for an amusing read!

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The Little Regulation That Will Make a Big Change in How You Do Business: Department of Commerce to Establish New Export Controls on Emerging Technologies

Key Takeaways:

  • Emerging technology sectors will soon be subject to new export controls.
  • Affected sectors include biotech, computing, artificial intelligence, positioning and navigation, data analytics, additive manufacturing, robotics, brain-machine interface, advanced materials, and surveillance.
  • New export controls on these sectors will likely require companies to obtain a license to export products to China and other destinations, and impose restrictions on sharing information with foreign nationals.
  • These sectors will also be added the list of industries subject to enhanced foreign investment scrutiny by the U.S. Committee on Foreign Investment in the United States (CFIUS).
  • The U.S. government has invited comments on the criteria to be used to establish new controls. The deadline for comments is December 19, 2018.

Export controls and other regulations often lag a step or two behind the times. That trend has accelerated with the pace of technological advancement. As a result, for many years, technical know-how in many cutting-edge technical fields has not been subject to export controls. This has meant that many commercial technical innovations could be freely exported without significant restrictions. As long as they were not designed for a military application, and no encryption technology involved, many new ideas developed in the United States were simply unaccounted for in the U.S. Export Administration Regulations (EAR).

But the U.S. Department of Commerce, Bureau of Industry and Security (BIS) is about to make up a lot of ground in a single, large leap. Continue Reading

CLIENT ALERT: Iran Sanctions Are Back On: Can Business Continue?

The Prohibitions

On May 8, 2018, the United States withdrew from the Joint Comprehensive Plan of Action and reimposed all pre-JCPOA sanctions against Iran. We provide a detailed discussion of the reimposition in our article linked here (and linked here is our prediction, a year earlier, that it would happen). After a prescribed wind-down period, all U.S. sanctions on Iran are now in force. Effectively, U.S. sanctions on Iran now return to their pre-2016 levels, including secondary sanctions on non-U.S. companies transacting with the Government of Iran and many of Iran’s industries and financial institutions. Continue Reading

FIRRMA Takes Form as CFIUS Enacts a New Pilot Program Targeting “Critical Technologies”

  • On October 10, 2018, the Committee on Foreign Investment in the United States put into effect the first mandatory filing requirement ever imposed by CFIUS. The Department of Treasury’s summary of the Pilot Program is available here.
  • Effective November 10, 2018, CFIUS will require reviews of critical technology investments – including certain non-controlling investments – from any country.
  • A failure to file notice or a new short form declaration to CFIUS may result in a civil monetary penalty up to the value of the transaction.
  • The requirements will not apply to any transaction that is completed prior to November 10, 2018 or any transaction for which the material terms were established prior to October 11, 2018.

Background

On August 13, 2018, President Trump signed FIRRMA into law. FIRRMA is a transformational expansion of the authority of the Committee on Foreign Investment in the United States (CFIUS) to review certain transactions that previously eluded the Committee’s jurisdiction (discussed in our blog, here). Congress left many critical aspects of the FIRRMA framework to be addressed through regulations promulgated by the Department of Treasury. Although we do not expect final rules to be forthcoming until late 2019 or early 2020, Congress empowered the Department of Treasury to “test-drive” parts of FIRRMA through Pilot Programs. Those programs can be implemented simply, taking effect 30 days after publication of the program requirements in the Federal Register. The adoption and implementation of the Pilot Program for critical technologies represents the Department of Treasury’s first attempt to implement substantive parts of FIRRMA prior to issuing formal regulations. Continue Reading

The New NAFTA: the United States-Mexico-Canada Agreement (USMCA)

A tripartite agreement to save the North American Free Trade Agreement (NAFTA) has just been reached. Since June 2017, the United States, Canada, and Mexico have been renegotiating NAFTA. After over a year of negotiations, late on Sunday night, September 30, 2018, Canada agreed to sign the revised agreement. That agreement is called the United States-Mexico-Canada Agreement, or USMCA. Continue Reading

FCC’s Foreign Media Reporting Requirements: Extension of FARA or New Domain?

On September 4, 2018, the Federal Communications Commission issued a new rule requiring foreign media outlets to submit reports to the FCC disclosing their relationships with foreign principals. The notice was issued pursuant to the 2019 National Defense Authorization Act.[1] Continue Reading

The Latest U.S. Sanctions on Russia

A double agent. Nerve gas. Violations of international law. The recently imposed sanctions on Russia have all the makings of a James Bond movie but, unfortunately, those sanctions may cause some less-than-entertaining headaches for your business.

Why These Sanctions

On August 8, the U.S. State Department notified Congress it would impose new sanctions on Russia based on the U.S. Government’s determination that the Russian Government has used chemical and biological weapons in violation of international law. That determination was made under the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 (“CBW”) after the Russian government’s use of the “Novichok” nerve agent in an attempt to assassinate UK citizen (and double agent to Russia and the UK) Sergei Skripal and his daughter Yulia Skripal. Continue Reading

Expanding CFIUS: New Law Strengthens And Slows Investment Review

This week, you have likely heard about FIRRMA, the Foreign Investment Risk Review Modernization Act, the law that will expand CFIUS. We have written about a number of aspects of the new law as it was being made, including the following:

In this alert, we provide a quick overview of the major points of that law. Continue Reading

Life in the Fast Lane: CFIUS-Free Investments, if You’re From the Right Country

All this past week, you have been hearing about FIRRMA, the new legislation that will increase the powers of the Committee on Foreign Investment in the United States that is expected to be signed into law in the coming weeks. As we predicted here and here, FIRRMA will authorize CFIUS to review non-controlling investments by foreign companies, to enhance restrictions on investment in certain “critical technology,” to target real estate deals in proximity to sensitive U.S. Government sites, and to require mandatory filings for certain investments by foreign government-owned entities. Continue Reading

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