Yesterday, the U.S. Department of Commerce, Bureau of Industry and Security (BIS) published a final rule (the Final Rule) imposing export controls on additional emerging technologies pursuant to the Export Control Reform Act of 2018 (ECRA).[1] We previously wrote about the process to identify and impose export controls on emerging and foundational technologies under the ECRA, as well as the steps taken in furtherance of that process to date, here.
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U.S. Trade
BIS Issues Long-Awaited Request for Public Comment on Foundational Technologies
On August 27, 2020, the U.S. Department of Commerce, Bureau of Industry and Security (BIS) issued an advance notice of proposed rulemaking (the ANPRM) requesting public comment on the definition of, and criteria for identifying, “foundational” technologies[1] that are essential to U.S. national security and should be subject to more stringent export controls.[2] The ANPRM marks another step toward implementing the long-delayed “emerging and foundational technology” provisions of the Export Control Reform Act of 2018 (ECRA).[3] Like the earlier ANPRM regarding emerging technologies, the rulemaking is still at a conceptual stage.…
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CFIUS Releases 2019 Annual Report
The Committee on Foreign Investment in the United States (CFIUS) recently released its 2019 annual report, which provides information and statistics regarding transactions reviewed by CFIUS during 2019. CFIUS released its 2018 annual report (as well as summary data for transactions reviewed in 2019) last month, which we wrote about here. The 2019 annual report confirms and expands on the more limited 2019 data released last month.
Key takeaways include: (i) the number of CFIUS notices has remained relatively consistent over the past three years; (ii) the percentage of notices that proceeded to a second-stage investigation decreased significantly from 69% in 2018 to 48.9% in 2019; (iii) the percentage of notices withdrawn and refiled decreased from 18.6% and 18.3% in 2017 and 2018, respectively, to 7.8% in 2019; and (iv) only 4.3% of transactions reviewed by CFIUS during 2019 were abandoned as a result of CFIUS issues, compared to 10.5% and 8.7% in 2017 and 2018, respectively.…
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CFIUS Blocks Joint Venture Outside the United States, Releases 2018-2019 Data, and Goes Electronic
Over the last few weeks, there has been a flurry of activity at the Committee on Foreign Investment in the United States (CFIUS). In addition to imposing filing fees, which we wrote about here, and issuing proposed amendments to broaden the mandatory CFIUS notification requirements, which we wrote about here, CFIUS recently blocked a robotics joint venture in China with no U.S. assets and limited to operations outside the United States, released detailed information regarding the transactions reviewed by CFIUS during 2018 (as well as summary data for transactions reviewed in 2019), and announced a new electronic filing system.…
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Proposed Rule Would Broaden CFIUS Mandatory Notification Requirements
On May 21, 2020, the U.S. Department of the Treasury published a proposed rule (the “Proposed Rule”) that would significantly broaden the scope of mandatory filing requirements of the Committee on Foreign Investment in the United States (“CFIUS”) for foreign investments involving U.S. critical technology businesses.
The Proposed Rule abandons the current restriction to specified…
BIS Tightens National Security Export Controls
On April 28, 2020, the U.S. Department of Commerce, Bureau of Industry and Security (BIS) published two final rules and one proposed rule[1] that will result in tighter restrictions on exports, reexports, and in-country transfers of dual-use items subject to the Export Administration Regulations (EAR) and controlled for national security reasons to China, Russia, Venezuela, and a number of other countries. Companies involved in exports and reexports of controlled items to these countries should carefully review the changes.…
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CFIUS Releases Final FIRRMA Regulations
On January 13, 2020, the U.S. Department of the Treasury (“Treasury”) released final regulations (the “Final Regulations”) implementing the updates to the foreign investment review process of the Committee on Foreign Investment in the United States (“CFIUS”) contained in the Foreign Investment Risk Review Modernization Act of 2018 (“…
Sanctions Outlook: Congress to Consider Sanctions Provisions in FY2020 Defense Bill
By Paul Marquardt & Samuel H. Chang on
Over the last few weeks, the U.S. House and Senate have separately passed a number of amendments to the National Defense Authorization Act for Fiscal Year 2020 (the “NDAA”) that, if enacted, would expand sanctions on persons and activities related to North Korea, China, Russia, Burma, and certain Central American states.…
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Russia Sanctions Bill Reintroduced by Bipartisan Group of Senators
By Paul Marquardt & Samuel H. Chang on
On February 13, 2019, a bipartisan group of senators introduced a draft bill that, if adopted, would significantly strengthen sanctions relating to the Russian Federation. Introduced as the “Defending American Security from Kremlin Aggression Act of 2019” (“DASKA”), the wide-ranging bill covers a number of subjects, in particular a range of new cybersecurity provisions. This note focuses on the sanctions provisions, which would:…
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OFAC Takes Aggressive Enforcement Action in Connection With M&A Transactions and Spells Out Compliance Expectations
The Office of Foreign Assets Control of the U.S. Treasury Department recently issued a series of instructive press releases regarding enforcement actions taken against several companies. The decision to publicize these enforcement actions could signal a more activist and expansionist approach to sanctions enforcement matters and may evidence a broadening of OFAC’s enforcement priorities as the long run of enforcement against financial institutions begins to wind down. The actions demonstrate a focus on acquisition due diligence and conduct by overseas entities, and in particular on aggressive action against U.S. companies who fail to terminate sanctioned business by their newly acquired overseas subsidiaries; indeed, in a number of these cases OFAC took enforcement action despite the fact that the U.S. acquiror explicitly directed the termination of the sanctioned business, was deceived by officials of the acquired entity, and voluntarily self-reported the violation after discovering it. OFAC has also begun to spell out, in enforcement actions, the elements of sanctions compliance programs it imposes on violators (and, presumably, would consider a benchmark for other companies).…
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