On November 8, 2017, the House and Senate introduced the Foreign Investment Risk Review Modernization Act of 2017 (FIRRMA) proposing the first amendments to the CFIUS process since the Foreign Investment and National Security Act was passed in 2007. Although the bill has bi-partisan support and a good chance of passage, there are no guaranties on anything these days where Congress is concerned.

Of interest to export geeks is the proposed new definition of critical technologies to be considered by CFIUS during the review process. Section 3(a)(8) of the proposed legislation defines critical technologies to include:

(i) Defense articles or defense services included on the United States Munitions List set forth in the International Traffic in Arms Regulations under subchapter M of chapter I of title 22, Code of Federal Regulations.

(ii) Items included on the Commerce Control List set forth in Supplement No. 1 to part 774 of the Export Administration Regulations under subchapter C of chapter VII of title 15, Code of Federal Regulations, and controlled—

(I) pursuant to multilateral regimes, including for reasons relating to national security, chemical and biological weapons proliferation, nuclear nonproliferation, or missile technology; or

(II) for reasons relating to regional stability or surreptitious listening.

What that means is that items controlled solely for Crime Control or AT reasons won’t be critical technologies and that CFIUS will not get worked up if a Chinese company seeks to buy the Cowpoke Cattle Prod (ECCN 0A985) Company in Wyoming. Nor should it care much if a foreign purchaser makes a bid for Missouri-based Ferguson Sjamboks and Tonfas (ECCN 0A9678) R US, Inc.

It is, of course, unlikely that CFIUS would have, either before or after any potential passage of the proposed legislation, considered the fact that the target made cattle prods (or tonfas) even though it has routinely examined transactions where other export-controlled goods were involved. But the proposed legislation, if it becomes law, would provide a statutory basis for CFIUS to ignore issues arising from the U.S. business producing AT- or CC-controlled items.

Copyright © 2017 Clif Burns. All Rights Reserved. 

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