The Commerce Department outlined its prohibitions for the parent companies of TikTok and WeChat, saying in notices released Sept. 18 that it will no longer allow transactions between U.S. parties and the Chinese companies or their subsidiaries. The prohibitions detail a range of blocked activities for both ByteDance Ltd. and Tencent Holdings, including bans on providing internet hosting services, content delivery services and transactions with the two companies. Certain prohibitions on the availability of TikTok in the U.S. took effect Sept. 20, and all prohibitions on WeChat are effective as of Sept. 20. Other restrictions on TikTok will take effect Nov. 12.
Two-way investment between the U.S. and China dropped to a nine-year low during the first half of 2020, the National Committee on U.S.-China Relations said in a Sept. 17 report prepared with data from the Rhodium Group. It also said growing tensions between the two sides are leading to an increase in U.S. investment reviews, specifically of past Chinese transactions.
The Treasury Department issued its final rule to modify mandatory declaration requirements for certain transactions involving critical technologies and made several revisions in response to industry comments. The changes include technical revisions and clarifications related to exemptions and the timing of determining whether a party must submit a declaration.
Sen. Marco Rubio, R-Fla., urged the Committee on Foreign Investment in the U.S. to review the potential purchase of Pennsylvania-based GNC Holdings by Harbin Pharmaceutical Group, a state-controlled Chinese pharmaceutical company. Rubio said the purchase falls within CFIUS’s purview because it involves a Chinese company acquiring sensitive data on “millions” of GNC Holdings’ customers and retail locations “on and around military installations” across the U.S.
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Although foreign investors and U.S. exporters should be closely monitoring the Commerce Department’s effort to restrict foundational technologies, traders should not expect controls anytime soon, Sidley Austin said in an Aug. 27 post. The rulemaking process will likely take longer than Commerce’s emerging technology effort, the law firm said, which began with a 2018 pre-rule and has been criticized by industry for moving too slowly (see 1911070014).
The Treasury Department is seeking comments on an information collection related to foreign investment reviews by the Committee on Foreign Investment in the U.S., a notice released Aug. 28 said. The collection notes that Treasury recently introduced a new case management system to allow CFIUS filers to submit certain information online (see 2005180029). As of June 1, its use is now mandatory. Comments are due Sept. 30.
The Trump administration will likely continue to impose restrictions on transactions with large Chinese technology companies, particularly as the Committee on Foreign Investment in the U.S. places more scrutiny on Chinese investments involving personal data, trade lawyers said. Industry should prepare for more announcements similar to President Donald Trump’s executive orders on TikTok and WeChat (see 2008070024), one lawyer said.
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).