There will be more trade uncertainty in 2020 than in 2019 despite a phase one deal with China, trade experts said during a Jan. 22 panel hosted by the Center for Strategic and International Studies. As trade tensions with Europe come to the foreground and as the U.S. potentially negotiates a more comprehensive deal with Japan, one expert said, the administration will not have enough time and resources to start on phase two of the deal with China as it tries to implement the first phase. Another panelist said the U.S. and China will likely come to a “narrow” phase two deal as the election approaches, but that deal will not provide relief for the international trade environment.
Akin Gump hired Hagir Elawad, previously legislative affairs director for the United Arab Emirates Embassy in the U.S., as a senior policy advisor in the firm's international trade practice, it said in a news release. While at the embassy, she worked on “a wide array of issues, including sanctions, export controls, aviation and aerospace, Committee on Foreign Investment in the United States matters,” the firm said.
Final FIRRMA Regulations Address Commenter Concerns, Omit Clearer Definition for Critical Technology
The Treasury Department’s final regulations for the Foreign Investment Risk Review Modernization Act made several changes to the proposed rules based on public comments and provided more clarity about FIRRMA’s “excepted foreign states” concept. But Treasury did not provide a more specific definition for “critical technologies” despite several requests from industry.
Recently Released Export Control Signals BIS Intent to Narrowly Control Emerging Tech, Law Firms Say
The Commerce Department’s narrow set of controls on exports of geospatial imagery software issued earlier this month (see 2001030024) could foreshadow a more “targeted and restrained approach” in the agency’s emerging technology effort, according to a Jan. 8 post from Paul Hastings. By limiting the controls to software that is only “specially designed” for specific purposes, such as “training a neural network to analyze geospatial imagery,” Commerce is signaling its intention to impose controls that only capture small slivers of technology, the post said. “The move might signal an inclination by [the Bureau of Industry and Security] to take a careful approach to regulating [artificial intelligence] and other emerging technologies.”
The recently released annual reports to Congress on reviews conducted by the Committee on Foreign Investment in the U.S. in 2016 and 2017 (see 1911220060) show an “upward trend” in the number of notifications filed with CFIUS, according to a Nov. 26 post by Thompson Hine. In particular, voluntary notifications for filings in the finance, information and services sectors during the 2016-2017 period (see 1911220060) were particularly high, the post said. For the 2015-2017 period, acquisitions involving Chinese investors accounted for the largest number of CFIUS notices -- about 26 percent of all notices, the post said. In addition, the use of “mitigating measures to obtain CFIUS approval is increasing,” the law firm said. Mitigating agreements -- or agreements put in place by CFIUS agencies that “feel that” certain conditions must be met to ensure compliance and to mitigate potential risk to U.S. national security -- were involved in 18 transactions in 2016 and jumped to 29 transactions in 2017, the post said.
The Treasury Department recently released its annual report to Congress on covered transactions by the Committee on Foreign Investment in the United States during 2016 and 2017. The report includes trend data on the transactions, CFIUS investigations, business sectors involved in CFIUS filings and a “detailed discussion” of the “perceived adverse effects of covered transactions on the national security” of the U.S. The report also contains a section assessing whether there is “credible evidence of a coordinated strategy” by foreign governments to acquire critical U.S. technology. The report said foreign governments are “extremely likely” to use a “range of collection methods to obtain critical U.S. technologies,” saying U.S. tech is targeted by foreign “intelligence services, private sector companies, academic and research institutions, and citizens of dozens of countries.”
A former top Commerce and trade official said the U.S.’s recent efforts to reform export controls and foreign investment screening are some of the most consequential developments the trade industry has seen in years. “The passage of [the Export Control Reform Act] and [the Foreign Investment Risk Review Modernization Act] together represents one of the biggest changes in trade compliance probably in at least a generation,” said Chris Padilla, former undersecretary for international trade and former assistant U.S. trade representative.
Four Republican members of the House Financial Services Committee praised the Treasury Department’s proposed regulations for the Foreign Investment Risk Review Modernization Act but also criticized several key areas, according to comments released Oct. 29. The comments were signed by Reps. Patrick McHenry, R-N.C., Andy Barr, R-Ky., French Hill, R-Ark., and Steve Stivers, R-Ohio.
Companies and trade groups warned the Treasury Department that the proposed regulations for the Foreign Investment Risk Review Modernization Act may repel foreign investors and customers, fails to clearly define “critical technologies” and could place trusted trading partners at disadvantages, according to comments due Oct. 17.
The Congressional Research Service issued an Oct. 3 report detailing how the Foreign Investment Risk Review Modernization Act regulations will reform the Committee on Foreign Investment in the U.S. The report explains the new powers FIRRMA grants CFIUS, what changes are proposed, potential issues the regulations may pose for Congress, and how FIRRMA impacts reporting procedures and export controls. The Treasury Department released the proposed FIRRMA regulations in September, and comments are due Oct. 17 (see 1909180018).