TikTok, the video-sharing application owned by China-based ByteDance, sued the Trump administration for banning U.S. transactions with the company (see 2008070024), saying the administration’s decision was heavily politicized and lacked due process. TikTok also said it was the subject of a non-transparent review by the Committee on Foreign Investment in the U.S., and called the administration’s ban a “misuse” of the International Emergency Economic Powers Act.
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 Chinese government is placing more of an emphasis on infiltrating U.S. companies and universities to steal export controlled technologies, said John Demers, the U.S. assistant attorney general for national security. China has increasingly turned to its intelligence agencies, such as the Ministry of State Security, to embed officials in U.S. institutions, Demers said.
The Treasury Department released its annual report to Congress for 2019 last month on the Committee on Foreign Investment in the U.S., outlining CFIUS statistics, key judgments and an overview of transactions reviewed by the committee. CFIUS said 231 notices were filed last year, roughly the same number of notices filed in 2017 and 2018, which were 237 and 229, respectively. CFIUS took an average of 45 days to complete a review of covered transactions and 85 days to complete an investigation in 2019, the report said. The report also notes a drop in investigations -- CFIUS conducted 113 investigations in 2019 after conducting 158 in 2018 and 172 in 2017.
The Treasury Department finalized the fee structure for filing certain transactions with the Committee on Foreign Investment in the U.S. and made a “clarifying revision” to the definition of “principal place of business,” according to a final rule released July 28. The fee structure was first outlined in March and April (see 2004280027), and the original definition for principal place of business was outlined in a January rule. The rule takes effect Aug. 27.
Export Compliance Daily is providing readers with some of the top stories for July 20-24 in case you missed them.
U.S. agencies are exploring ways to enforce industry compliance with mitigation agreements with the Committee on Foreign Investment in the U.S., despite travel restrictions imposed by the COVID-19 pandemic, a top Justice Department official said. The pandemic has specifically caused challenges around in-person site visits, which help enforcement agents ensure companies are adhering to CFIUS conditions for an approved investment, John Demers, assistant attorney general for national security, said.
The Committee on Foreign Investment in the U.S. recently opened investigations into “dozens” of completed deals involving Chinese investments that were not officially notified to CFIUS, a July 15 report from The Capitol Forum said. The deals -- which mostly took place within the past five years -- involved Chinese investments in U.S. technology, heavy industry and entertainment companies, the report said. Since May, CFIUS has “substantially” increased scrutiny of non-notified deals, the report said. The Treasury Department did not comment. Industry has seen a notable increase in CFIUS scrutiny on transactions involving medical supplies and sensitive technologies, especially those associated with Chinese investors (see 2005290027). CFIUS is also closely monitoring Chinese investors trying to take advantage of companies struggling due to the COVID-19 pandemic (see 2006230057).
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U.S. and Chinese trade tensions could last for years and require a more clear, consistent approach from the U.S., experts told the U.S.-China Economic and Security Review Commission June 24. The U.S. should not address competition challenges through decoupling, they said, but should instead invest more heavily in technology research, pursue more involvement at international standards bodies and work with trade partners to counter China’s rise.