Commerce's Lengthy ECRA Implementation Impeding Work of CFIUS, CRS says

The Commerce Department’s lengthy rollout of export controls over emerging and foundational technologies may be impeding congressionally mandated export control reform measures and the work of the Committee on Foreign Investment in the U.S., the Congressional Research Service said in a report Aug. 21. Commerce’s effort, mandated by the Export Control Reform Act of 2018, has resulted in several export control notices, including on geospatial imagery software (see 2001030024) and items agreed to by multilateral control bodies (see 2006160034). But Commerce has yet to release its advance notice of proposed rulemaking for foundational technologies (see 2008040008), and the pace of the controls has frustrated some in industry (see 2002040057 and 1911070014).

The “absence of new technology controls arguably impedes not only ECRA implementation but also congressional reforms that expanded the authority of” CFIUS “to review Chinese and other foreign investments in critical and emerging technologies,” the report said. CFIUS’s jurisdiction was expanded earlier this year by the Foreign Investment Risk Review Modernization Act, which allows CFIUS to review transactions involving emerging and foundational technologies (see 2001140060). But because of Commerce delays in issuing those controls, CFIUS may not have a clear definition for what technologies to target (see 2002210026). “CFIUS can only act against noncontrolling foreign investments if the technologies involved in the transaction are controlled,” the report said.

A Commerce spokesperson said its emerging technology effort has resulted in controls on “31 specific technologies ... with another [six] controls awaiting Federal Register publication.” The Treasury Department, which chairs CFIUS, did not comment.

Lawmakers said the administration should be doing more to restrict sales of emerging technologies to China (see 2003300039), and the CRS said Congress may seek to review the status of ECRA implementation and whether the “pace and scope of action and reforms are sufficient.” Congress may also want to consider whether the U.S. should pursue more multilateral controls to make U.S. restrictions more effective, review the “status of the interagency process” for the controls, and more closely scrutinize China-related licensing decisions.