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.
Export Compliance Daily is providing readers with some of the top stories for Aug. 24-28 in case you missed them. You can find any article by searching on the title or by clicking on the hyperlinked reference number.
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).
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.