Commerce Department Proposes Export Controls on Emerging Technologies

2018/12/23

By: George W. Thompson of Thompson & Associates, PLLC (gwt@gwthompsonlaw.com)

“It’s tough to make predictions, especially about the future.” Yogi Berra’s aphorism notwithstanding, the Commerce Department is attempting to do just that with its Review of Controls for Certain Emerging Technologiesand has enlisted all of us to help.

As provided by the Export Control Reform Act of 2018, Commerce seeks to identify “emerging and foundational technologies” that are “essential to the national security of the United States.” The goal is to restrict foreign access to designated technologies without hampering their development in the United States.

The end result will be an expansion of the Commerce Control List beyond its current coverage. Although the levels of control on such newly-designated items are open to discussion, the agency pointed out that “at a minimum it must require a license for the export of emerging and foundational technologies to countries subject to a U.S. embargo, including those subject to an arms embargo”.

That “arms embargo” language should catch your eye, since China is among the countries covered. This means that sharing of “emerging and foundational technologies” with China, as well as “deemed exports” to Chinese nationals, would become licensable transactions in place of their current license-free authorization.

Commerce has identified the following sectors to consider for designation as “emerging technologies”. (1) Biotechnology, (2) Artificial intelligence (AI) and machine learning technology, (3) Position, Navigation, and Timing (PNT) technology, (4) Microprocessor technology, (5) Advanced computing technology, (6) Data analytics technology,

(7) Quantum information and sensing technology, (8) Logistics technology, (9) Additive manufacturing (such as 3D printing), (10) Robotics, (11) Brain-computer interfaces, (12) Hypersonics, (13) Advanced materials and (14) Advanced surveillance technologies.

The agency seeks comments on such points as defining emerging technologies and their levels of development in the United States and abroad, identifying those important to national security, inclusion of other categories and the impact that “controls would have on U.S. technological leadership.” Although “foundational technologies” will be covered at a later date, Commerce also seeks comments “on treating emerging and foundational technologies as separate types of technology.”

Given that imported products from industry sectors within the “Made in China 2025” initiative have been covered by the Section 301 tariffs, the “emerging and foundational technologies” initiative seems like another full-bore effort to slow China’s technological development; in fact, there is some overlap between the two lists. The portents for U.S. companies and their foreign partners, of course, is that previously-unrestricted sharing of whatever technologies ultimately are designated is coming to a close.

Comments to the Department of Commerce, Bureau of Industry and Security are due by January 10, 2019.