emerging-technologies 03 June 2021

Unfinished Business: Report blasts BIS emerging and foundational tech efforts

The US Department of Commerce has failed to deliver on the implementation of two crucial pieces legislation, the Foreign Investment Risk Review Modernization Act (‘FIRRMA’) and the Export Control Reform Act (‘ECRA’), by having yet to produce a list of ‘emerging and foundational technologies’. So says a report published by the US Congress’s US-China Economic and Security Review Commission, entitled ‘Unfinished Business’.

The report says that since the acts became law in 2018, ‘there has been a significant delay in forming this list along with a lack of clarity on the process and methodology.’

The list, it says, ‘would support the development of the new controls directed by these two acts and identify additional national security risks not covered by preexisting control lists.’

It adds that the ‘years-long delay’ in developing the definitions may exacerbate national security risks, and that ‘in the absence of the complete list, CFIUS continues to operate without this additional guidance and may be constrained in its ability to screen transactions.’

The report does acknowledge that creating such a list under ECRA is one of its ‘most challenging’ features to implement. And it notes that when, in January 2020, BIS [the Bureau of Industry and Security, within the Department of Commerce] released a rule to place interim controls on geospatial imagery involving AI neural networks on a one-year temporary classification list, ‘some law firms speculated this might also be the first identification of an “emerging technology” under ECRA, but BIS never specified that this action was pursuant to its emerging technologies list.’

It said that BIS ‘has made even less progress on the foundational technologies list, with little clarity on even the definition of the term itself.’

The report notes, ‘Even without full definition of the technologies themselves, a clear methodology, which is sufficiently complex from a technical and regulatory standpoint, might prove particularly useful for government and industry analysts moving forward.’

The report is at: https://www.uscc.gov/sites/default/files/2021-06/Unfinished_Business-Export_Control_and_Foreign_Investment_Reforms.pdf