The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) recently issued an advance notice of proposed rulemaking (ANPRM) to request comments that will assist BIS in developing a definition of and criteria for identifying “foundational technologies.” As discussed below, such comments must be submitted to BIS on or before October 26, 2020.

Pursuant to the Export Control Reform Act of 2018 (ECRA), BIS and its interagency partners are required to determine what “emerging technologies” and “foundation technologies” should be controlled for U.S. national security purposes. BIS previously issued an ANPRM relating to “emerging technologies” on November 19, 2018. In response to the emerging technologies ANPRM, comments were submitted by several hundred entities, which are still being reviewed by BIS.

In the emerging technologies ANPRM, BIS identified a nonexhaustive list of technologies that it indicated may warrant consideration as possible emerging technologies. In contrast, the foundational technologies ANPRM merely states that “[f]oundational technologies essential to the national security are those that may warrant stricter controls if a present or potential application or capability of that technology poses a national security threat to the United States.” In order to determine whether technologies are “foundational” (and thus requiring stricter controls), BIS will evaluate whether specific items have present or potential applications or capabilities to pose a national security threat. Such technologies may include ones that are currently subject only to anti-terrorism controls on the Commerce Control List (CCL) or those designated as Export Administration Regulations (EAR) 99.

BIS also states that, pursuant to the ECRA, the following things will be taken into account during the interagency process:

  • The development of foundational technologies in foreign countries;
  • The effect export controls may have on the development of such technologies in the United States; and
  • The effectiveness of export controls imposed pursuant to ECRA on limiting the proliferation of foundational technologies to foreign countries.

Significantly, BIS further notes that the term “foundational technologies” includes not only “technology” but also “commodities” and “software” as those terms are used in the EAR.

BIS also states that foundational technologies could include items that are currently subject to control for military end use or military end user reasons as provided in Supplement No. 2 to Part 744 of the EAR. These items include, among other things, semiconductor manufacturing equipment and associated software, tools, lasers, sensors and underwater systems that can be tied to indigenous military innovation efforts in China, Russia or Venezuela that may pose a national security threat to the United States. In addition, certain other items that fall within the scope of anti-terrorism and EAR classification under the regulations may also warrant greater controls as foundational technologies “if the items are being utilized or required for innovation in developing conventional weapons, enabling foreign intelligence collection activities, or weapons of destruction applications.”

In sum, BIS encourages comments on:

  1. How to further define foundational technology to assist in the identification of such items;
  2. Sources to identify such items;
  3. Criteria to determine whether certain items currently controlled only for anti-terrorism or EAR99 purposes are essential to U.S. national security;
  4. The status of development of foundational technologies in the United States and other countries;
  5. The impact specific foundational technology controls may have on the development of such technologies in the United States;
  6. Examples of implementing controls based on end-use and/or end user rather than, or in addition to, technology based controls;
  7. Any enabling technologies, including tooling, testing and certification equipment, that should be included within the scope of a foundational technology; and
  8. 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. “Fundamental research” as described in Section 734.8 of the EAR is not subject to the instant ANPRM.

Comments must be submitted to BIS on or before October 26, 2020, via the federal eRulemaking Portal or by mail to the U.S. Department of Commerce, Room 2099B, 14th Street and Pennsylvania Avenue NW, Washington, D.C., 20230. Additional instructions on submitting comments can be found in the foundational technologies ANPRM.