New U.S. Law Addresses Control of Emerging Technologies
The current political and security climate has spurred interest in maintaining control of emerging technologies developed in the United States. How this is accomplished was a point of contention recently, as legislation titled the Foreign Investment Risk Review Modernization Act (FIRRMA) moved through the U.S. Congress and was passed into law
The current political and security climate has spurred interest in maintaining control of emerging technologies developed in the United States. How this is accomplished was a point of contention recently, as legislation titled the Foreign Investment Risk Review Modernization Act (FIRRMA) moved through the U.S. congress and was passed into law.
The debate and final outcome of this legislation should be of great interest to the companies and researchers working with technologies likely to be covered, such as artificial intelligence, autonomous vehicles, and quantum technologies. Though it is unknown at this time what technologies will be identified as "emerging" or "foundational," or what levels of control will be placed on identified items, the movement of this bill and the debate that surrounds its passage strongly indicates that additional controls are likely.
Additionally, a provision in this new law requires any new controls adopted by the U.S. as part of this process to be brought to the Wassenaar Arrangement, the international body setting control standards for 42 other countries, and therefore has the potential to have a global effect on export controls for emerging technologies.
Introduced by Senator Cornyn and Representative Pittenger, FIRRMA expands the authority of the Committee on Foreign Investment in the United States (CFIUS). As originally introduced, the bill would have added new authority to CFIUS to conduct an outbound technology review for any type of arrangement with a foreign person, such as a joint venture.
"IBM Vice President Christopher Padilla testified that the bill 'would duplicate and seriously undermine the existing U.S. export control regime, result in a flood of cases that would quickly overwhelm [CFIUS], and could constitute the most economically harmful imposition of unilateral trade restrictions by the United States in many decades.'"
Currently, outbound technology transfers are approved through the U.S. export control system, which primarily falls under the jurisdiction of the Department of Commerce, Department of State, and Department of Defense. The proposed change would have added another layer of control, requiring approval through CFIUS at the Department of Treasury for certain technology identified as "emerging." Many companies and industry representatives, including SPIE, expressed strong concerns with this proposed new layer of review outside of the current process for export controls.
During an 18 January 2018 hearing before the Senate Banking Committee on FIRRMA, IBM Vice President Christopher Padilla testified that the bill "would duplicate and seriously undermine the existing U.S. export control regime, result in a flood of cases that would quickly overwhelm [CFIUS], and could constitute the most economically harmful imposition of unilateral trade restrictions by the United States in many decades."
Due to the objections expressed by stakeholders, the U.S. Senate and House of Representatives amended their respective bills to remove the provision giving CFIUS authority to review outbound technology, and as a compromise added provisions to identify and control "emerging" and "foundational" technologies through the current export control system.
New Emerging and Foundational Controls
The emerging and foundational technology review established in the bill would begin with an interagency process to identify the list of technologies considered "emerging" or "foundational."
The Department of Commerce would retain primary authority over deciding the level of control imposed on the technology identified in this review process. However, congress prescribes some minimum control levels in the bill, requiring a license for items identified as "emerging" or "foundational" to any "country subject to an embargo, including an arms embargo, imposed by the United States." This notably includes China, as they are an arms embargoed country.
The Trump administration threatened to issue an executive order to add controls to emerging technologies on 30 June 2018, but backed off of this approach at the last minute and chose to defer to Congress to pass FIRRMA and the agencies to control these items as written in the FIRRMA bill. However, it is clear the administration has great interest in the issue of emerging technology controls, and will be closely monitoring the agencies as they implement this new law.
The provisions of the FIRRMA bill were attached to the National Defense Authorization Act (NDAA), which became law on 13 August 2018. However, the law that was passed simply requires a process for identifying and controlling emerging and foundational technologies, but does not prescribe what these technologies are or largely how they should be controlled outside of the minimum requirement of a license to arms-embargoed countries.
As is often the case, details such as these are the most important in terms of impact to the community and will be decided through an interagency process. Therefore, focus will now shift to implementation of the provisions at the agencies involved, which will be primarily shepherded by the Department of Commerce in consultation with the Department of State and the Department of Defense.
As announcements are published by the U.S. government seeking input on this matter, SPIE will continue to provide this information to its membership. For the community of stakeholders working in the area of technologies likely to be impacted, engagement will be necessary to ensure execution of this process does not hamper growth in many exciting fields of photonics research.
Jennifer Douris O'Bryan is the Government Affairs Director for SPIE and the Vice Chair of the Sensor and Instrumentation Technical Advisory Committee (SITAC) at the Department of Commerce.
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