On October 5, 2020, the U.S. Commerce Department's Bureau of Industry and Security (BIS) released a final rule adding six recently developed or developing technologies to BIS's Export Administration Regulations' (EAR) Commerce Control List (CCL). The newly controlled technologies are hybrid additive manufacturing/computer numerically controlled tools; specific computational lithography software; certain technology for finishing wafers for 5nm production; limited digital forensic tools; certain software for monitoring communications from a telecommunications service; and sub-orbital aircraft. These emerging technologies are subject to multilateral controls pursuant to the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies, a 42-member country export control regime; all 42 member countries are controlling these emerging technologies. The listing also addresses BIS's statutory duty to designate emerging technologies pursuant to the Export Control Reform Act (ECRA) and BIS's November 2018 Advanced Notice of Public Rulemaking about the designation of emerging technologies that are essential to U.S. national security.
According to the U.S. Department of Commerce, BIS has now implemented new controls on 37 emerging technologies. In addition to the six new designations, BIS has added controls on 24 chemical weapons precursors, discrete microwave transistors, continuity of operation software, post-quantum cryptography, underwater transducers designed to operate as hydrophones, air-launch platforms, and geospatial imagery software. The industries likely affected most by the new controls are aerospace, biotechnology, chemical, electronics, encryption, geospatial imagery, and marine. As BIS promised, the emerging technologies are narrowly tailored and almost all subject to the multilateral controls.
The Emerging Technologies
As described below, the rule adds one new export control classification number (ECCN) to CCL and revises five other ECCNs.
Implications for Foreign Investment into U.S. Businesses
In addition to being important for ensuring compliance with export control regulations, including those covering development of these technologies in the United States by foreign persons, the publication of the new controlled technologies is also important in determining whether a filing with the Committee on Foreign Investment in the United States (CFIUS) is required or advisable. Any U.S. businesses that designs, tests, fabricates, develops, produces, or manufactures any of the newly controlled items and takes foreign investment may be subject to mandatory filings with CFIUS; this is irrespective of whether the U.S. business exports the controlled items. Significant penalties may be imposed for failure to make a mandatory filing. Thus, it is essential that any U.S. business that may be accepting any foreign investment, whether directly or indirectly, verify the export classification of its products, software, and technologies and ensure whether the foreign investment, including minority positions, are subject to mandatory or discretionary CFIUS filings.
Our National Security team is happy to assist you with any questions you may have concerning these new regulations. For questions regarding the new ECCNs or how export controls may impact development or sale of your products, please contact our Export Control specialists, Josephine Aiello LeBeau, Melissa Mannino, or Anne Seymour. For questions concerning how these new regulations impact CFIUS determinations or if you have general CFIUS-related questions, please contact our CFIUS specialists, Stephen Heifetz, Joshua Gruenspecht, or Melissa Mannino.