On August 13, President Trump signed into law the John S. McCain National Defense Authorization Act (NDAA) for Fiscal Year 2019, which includes both the Export Control Reform Act of 2018 (ECRA) and the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA). This benchmark legislation will have a far-reaching impact on U.S. businesses, including exporters and emerging technology developers.
Combined, ECRA and FIRRMA will explore potential threats to U.S. national security via foreign investors and technology exports and will seek to address concerns whether existing authorities can adequately handle the potential threats to national security. Both the ECRA and FIRRMA will empower the U.S. Government with greater authority over both.
Under ECRA, the President has the authority to establish export controls over dual use and military items as well as over a new category for “emerging and foundational technologies”, which prior to the new legislation have been left largely uncontrolled. Once a technology has been added to this new category, the owner of that technology will require a license, at a minimum, in order to export, re-export, or transfers technologies to destinations such as Russia or China. The ECRA also grants authorities the ability to enforce penalty provisions for those found in violation of these rules. While the ECRA does not specify which emerging and foundational technologies will be focused on, it is anticipated that the following technologies will be targeted.
- artificial intelligence
- augmented reality technology
- automated machine tools
- additive manufacturing
- autonomous vehicles
- advanced battery technology
- financial technology
- high-temperature superconducting technology
- hydrogen and fuel cells
- integrated circuits, semiconductors and microelectronics
- robotics and intelligent mobile terminals
ECRA also covers the Anti-Boycott Act which prohibits U.S. companies and their subsidiaries from complying with or supporting a foreign country’s boycott of another country, most specifically related to Israel.
FIRRMA amended the U.S. national security review process conducted by the Committee on Foreign Investment (CFIUS). CFIUS now has greater jurisdiction and the authority to review and take action on any investment in U.S. businesses or assets by foreign persons or entities which could pose significant national security concerns – specifically to business or assets involved in critical infrastructure, critical technology or sensitive personal data. FIRRMA also expands CFIUS’ jurisdiction to include acquisitions of real estate near sensitive facilities.
Massachusetts Export Center Webinar
The Massachusetts Export Center will be hosting a webinar to review ECRA and FIRRMA, implications for companies engaged in global business, and strategies for managing the changes ahead. Kevin Wolf, Partner at Akin Gump Strauss Hauer & Feld, LLP and Former Assistant Secretary of Commerce for Export Administration, will be the esteemed guest speaker.
When and Where
Date: Friday, October 12, 2018
Time: 11:30 a.m. – 1:00 p.m. EST
Cost: $50 / no charge for Compliance Alliance members
For more information, please visit the Massachusetts Export Center by clicking here.