Commerce Proposal Would Create Process to Block ICTS Imports, Other Transactions
The Commerce Department is proposing new procedures for how to review transactions, including imports, that involve information and communications technology and services (ICTS) and are seen as a potential threat, it said in Nov. 26 news release. The proposal is result of a May executive order that directed Commerce to lead the way in developing oversight of such transactions (see 1905160019). Commerce proposes to use “a case-by-case, fact-specific approach to determine those transactions that meet the requirements” described in the executive order.
Parties that are subject to the executive order will be expected to “maintain records related to such transaction in a manner consistent with the recordkeeping practices used in their ordinary course of business for such a transaction,” Commerce said. Transactions are defined as “any acquisition, importation, transfer, installation, dealing in, or use of any information and communications technology or service.” Transactions subject to the reviews are any that involve people or property under U.S. jurisdiction, “any property in which any foreign country or a national thereof has an interest,” and “was initiated, pending, or completed after May 15, 2019,” Commerce said.
The Commerce secretary “will decide whether the particular circumstances of a potentially prohibited transaction may meet” the standards outlined in the executive order, Commerce said. From there, Commerce would “direct notice to the parties of a transaction that an evaluation of a transaction is being conducted and that he has reached a preliminary determination regarding a transaction,” it said.
Commerce and other agencies then “would assess, for example, whether a party to a transaction is owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary, and whether the use of a certain class of ICTS or transactions by particular classes of users present an undue or unacceptable risk,” it said. “Parties notified of an evaluation and preliminary determination would have an opportunity to submit an opposition and information in support of their opposition, which may include proposed measures for mitigation, prior to the Secretary issuing a final determination.” After that, Commerce would issue a final determination to the parties and potentially to the public, it said.
When the secretary believes there's a transaction with unacceptable risk, Commerce “may require measures to mitigate the transaction’s identified risks or may prohibit the transaction, including by requiring that the parties engaged in the transaction immediately cease the use of the ICTS that poses the undue or unacceptable risk, even if such ICTS has been installed or was in operation prior to the Secretary’s determination,” it said. “The Secretary will not issue an advisory opinion or a declaratory ruling with respect to any particular transaction.”
Under the proposal, anyone who provides false or misleading information to Commerce, the Bureau of Industry and Security, CBP “or an official of any other United States agency, or indirectly through any other person” may be liable for civil penalties up to $302,584, it said. Comments are due Dec. 27.
(Federal Register 11/27/19)