On August 27, 2020, the U.S. Department of Commerce's Bureau of Industry and Security (BIS) issued an advance notice of proposed rulemaking (ANPRM) regarding export controls on foundational technologies. In August 2018, Congress enacted the Export Control Reform Act of 2018, which requires BIS to identify emerging and foundational technologies and establish appropriate export controls. BIS previously published an ANPRM requesting comments on emerging technologies. BIS is currently engaged in a process to identify foundational technologies, which are technologies that BIS determines are essential to U.S. national security and warrant stricter export controls than are currently in place. Following the public comment period ending on October 26, 2020, BIS expects to issue a proposed rule with new control levels for items currently controlled for anti-terrorism (AT) reasons on the Commerce Control List (CCL) or new Export Control Classification Numbers (ECCNs) for technologies currently classified as EAR99.
The ANPRM seeks comments from the public on the following issues:
(a) How to further define foundational technology to assist in identification of such items;
(b) Sources to identify such items;
(c) Criteria to determine whether controlled items identified in AT level ECCNs, in whole or in part, or covered by EAR99 categories, for which a license is not required to countries subject to a U.S. arms embargo, are essential to U.S. national security;
(d) The status of development of foundational technologies in the United States and other countries;
(e) The impact that specific foundational technology controls may have on the development of such technologies in the United States;
(f) Examples of implementing controls based on end-use and/or end-user rather than, or in addition to, technology based controls;
(g) Any enabling technologies, including tooling, testing, and certification equipment, that should be included within the scope of a foundational technology; and
(h) Any other approaches to the issue of identifying foundational technologies important to U.S. national security, including the stage of development or maturity level of a foundational technology, that would warrant consideration for export control.
BIS notes a specific concern relating to items that are currently subject to a license requirement for export for military end-use or to military end-users in certain countries under the Export Administration Regulations (EAR). Many of these items, including semiconductor manufacturing equipment and associated software tools, lasers, sensors, and underwater systems, are viewed as related to military innovation in China, Russia, and Venezuela. Additionally, BIS is concerned with items being utilized or required for innovation in developing conventional weapons, enabling foreign intelligence collection activities, or items with applications in weapons of mass destruction. BIS may impose more restrictive controls on technologies that it identifies as having been the subject of illicit procurement attempts, which may suggest dependency on U.S. technologies to further foreign military or intelligence capabilities or the development of weapons of mass destruction.
Items identified by BIS as foundational technologies may be subject to stricter export controls than those currently in place. At minimum, a license will be required for foundational technologies exported to countries subject to a U.S. embargo, including a U.S. arms embargo. Accordingly, all foundational technologies will require a license for export to China and deemed exports to Chinese nationals located in the United States. Additionally, foundational technologies are included in the definition of "critical technologies" in the regulations regarding review by the Committee on Foreign Investment in the United States (CFIUS). CFIUS filings are mandatory for foreign investments (including certain non-controlling transactions) in U.S. businesses that deal in critical technologies in certain sectors.