Export Compliance Daily is providing readers with some of the top stories for May 18-22 in case you missed them.
The Treasury Department issued a proposed rule to modify mandatory declaration requirements for certain transactions involving critical technologies. Under the rule, transactions would require a declaration if the critical technology would normally be subject to a U.S. export license. This would be a change from certain declaration requirements for the Committee on Foreign Investment in the U.S. outlined under a 2018 pilot program, which based those decisions on whether the transactions met criteria established by the North American Industry Classification System.
Parties will soon be able to submit information for transactions relating to U.S. foreign investment reviews through an online portal, the Treasury Department said May 18. Treasury will launch a web portal later this month to allow filers to submit information through a case management system, which will send all “transaction-related information” to the Committee on Foreign Investment in the U.S. Filers who plan to submit a notice or declaration later this month should create an account at ID.me, an online identity verification program that is required to access the CFIUS CMS. Treasury said it will release more information about the CMS before its release. The agency implemented the Foreign Investment Risk Review Modernization Act (see 2002200002) earlier this year and recently announced CFIUS filing fees for certain transactions (see 2004280027).
Chinese direct investment in the U.S. last year fell to its lowest levels in a decade and will likely continue to drop this year, according to a May 11 report from the National Committee on U.S.-China Relations and the Rhodium Group. Investment dropped to $5 billion in 2019 from a decade-high of $45 billion in 2016 due to more investment reviews by the U.S., restrictions on outbound investment by Beijing, the COVID-19 pandemic and rising tensions between the two countries, the report said. The decreased investment may be part of a broader trend caused by the pandemic as industry grows concerned about the consequences of over-dependence on foreign supply chains, the report said.
Export Compliance Daily is providing readers with some of the top stories for April 27 - May 1 in case you missed them.
The Treasury Department announced fees for filing certain transactions with the Committee on Foreign Investment in the U.S., according to a notice. The interim rule, which will apply to formal written voluntary notices filed with CFIUS and not transactions submitted through declarations, establishes a range of possible fees, depending on the value of the transaction, with $300,000 being the highest fee. The rule takes effect May 1, but Treasury is accepting public comments through June 1. The agency also issued a fact sheet and a guidance for paying filing fees.
European Union countries should closely monitor attempts to acquire European medical goods and technology through foreign direct investment and should increase investment screening tools, the European Commission said March 25. The EU’s “openness to foreign investment” needs to be “balanced by appropriate screening tools … now more than ever,” the commission said in guidelines to EU member states. The commission urged member states to be “vigilant” and “use all tools available … to avoid that the current crisis leads to a loss of critical assets and technology.”
Countries will more strictly review transactions involving foreign direct investment as the COVID-19 pandemic continues, especially the U.S., which could increase scrutiny and export controls in the biotechnology sector, trade lawyers said. The Committee on Foreign Investment in the U.S. may increase reviews of transactions involving health care technology to keep critical virus-fighting resources in the U.S., said Aimen Mir, a trade lawyer with Freshfields Bruckhaus Deringer. Mir, who also formerly served as the Treasury Department’s deputy assistant secretary for investment security, said the pandemic will also cause CFIUS and other agencies to increasingly look to prevent transfers of pathogen-related technologies and to maintain technology leadership in the biotechnology sector.
While it is too soon to tell whether recent U.S. reforms of foreign direct investment screening will prove successful, the regulations introduced novel provisions to incentivize improved global investment screening, according to a former investment screening counsel for the Treasury Department. The Foreign Investment Risk Review Modernization Act (see 2001140060) also appears to fill many of the gaps encountered by previous U.S. investment screening efforts, said Anne Salladin, a Hogan Lovells lawyer and former senior counsel to the chairperson of the Committee on Foreign Investment in the U.S.
U.S. administration officials will meet with the European Union and Japan next month to lobby for increased scrutiny of transactions involving sensitive technologies, a top Treasury Department official said. The meetings will also feature discussions of recent U.S. reforms to foreign direct investment screening, said Thomas Feddo, Treasury’s assistant secretary of investment security, and come as the U.S. begins to implement those reforms as part of the Foreign Investment Risk Review Modernization Act (see 2001140060). Feddo spoke during a Feb. 26 event hosted by the Asia Society.