As Foreign Investment Risk Review Modernization Act rules take effect Thursday, FIRRMA’s definition for critical technologies remains unclear due to a lack of Commerce Department proposed rules on emerging and foundational technologies, trade lawyers said. FIRRMA expands jurisdiction of the Committee on Foreign Investment in the U.S. to review some investments involving critical tech (see 2001150018). Commerce “has really issued just one set of regulations that could possibly cover emerging and foundational technologies,” said Vinson & Elkins' Dave Johnson, referencing an interim final rule to restrict exports of geospatial imagery software released by Commerce in January: “There's a lot of work they have to do in this area.” Johnson, speaking alongside Vinson & Elkins' Damara Chambers at a Tuesday panel hosted by the law firm, said the scope of businesses affected by FIRRMA’s regulations that deal in critical tech could be significant. Voluntary declarations may be very helpful, Chambers said. “For benign transactions that ... aren’t complicated for CFIUS to get their arms around, those should move very quickly under this voluntary filing process,” she said. “I’m very excited about the concept.” The Commerce Department didn't comment Wednesday.
China, India and the EU are among the regions tech and intellectual property groups recommended the Office of the U.S. Trade Representative monitor for international IP infractions. Public comments were due Friday for USTR’s 2020 Special 301 Review (see 1902080063). USTR has a Feb. 26 hearing. The Internet Association cited the EU’s new “onerous systems of copyright liability for internet services,” specifically the copyright directive. It “directly conflicts with U.S. law and requires a broad range of U.S. consumer and enterprise firms to install filtering technologies, pay European organizations for activities that are entirely lawful under the U.S. copyright framework, and face direct liability for third-party content,” IA said. IA didn’t recommend any specific countries for USTR’s priority watch list or watch list, raising concerns about China, India, Vietnam, Chile, Japan, Hong Kong and many others. BSA|The Software Alliance recommended USTR include Chile, China, India, Indonesia and Vietnam on its priority watch list; Argentina, Brazil, Korea, Mexico and Thailand on its watch list; and the EU as a region of concern. BSA cited measures that create market access barriers in the EU. The Computer & Communications Industry Association didn’t offer specific recommendations for the priority watch list or watch list. CCIA cited the EU’s recently enacted Copyright Directive and policies India is pursuing, which “pose significant negative consequences for the digital economy and depart from global norms.” Any “discriminatory practices under the guise of intellectual property that target U.S. exports should be identified and discouraged by USTR,” CCIA said. The International Intellectual Property Alliance recommended Argentina, Chile, China, India, Indonesia, Mexico, Russia, South Africa, Taiwan, Ukraine and Vietnam for the priority watch list. It recommended Brazil, Canada, Colombia, Ecuador, Peru, Switzerland, Thailand and UAE for the watch list. IIPA suggested the U.S. engage trading partners to “remove discriminatory and restrictive trade barriers in those countries that harm exports of U.S. creative goods and services.”
The Commerce Department seeks comment by April 6 on information collection for the “Technology Letter of Explanation,” said Thursday's Federal Register. The letter provides a description of the technology proposed for export to allow the Bureau of Industry and Security technical staff to evaluate the impact on the national security and foreign policy of approving a license.
The Commerce Department doesn’t have a timeline for releasing its next set of controls on emerging technologies and its advance NPRM for foundational technologies, despite expectations from top officials both would be published before 2020 (see 1912110040), a Bureau of Industry and Security official said Tuesday. “I would have thought that they would be out earlier,” said Hillary Hess, director of BIS’ regulatory policy division, at a Sensors and Instrumentation Technical Advisory Committee meeting. “I think everybody would like to see them come out, but I’m not sure how long it’s going to take. I’m having trouble getting a bead on it myself.” Interagency working groups are reviewing the proposed emerging technology controls, which include potential restrictions on exports of artificial intelligence and robotics items, Hess said. Although BIS published a January interim final rule that placed export controls on geospatial imagery software, that rule stemmed from existing export administration regulations process in place since 2012, Hess said. “None of [the working group] rules have been published yet.” Hess said the ANPRM for foundational technologies is in internal review.
Sony is “very concerned about the spread” of the coronavirus (see 2002040063), said Chief Financial Officer Hiroki Totoki in scripted remarks to analysts in Tokyo, mirroring others. “It is difficult to fully grasp what is going on, but we are exerting all efforts to gather information and assess the situation, and we are taking action where possible.” Sony extends “our condolences to the families of the people who have passed away, and our thoughts are with those who have been infected,” he said. The company reported quarterly results Tuesday for the three months ended Dec. 31. Concerns mounted last week the virus could affect U.S. tech and other supply chains (see 2001310052).
Plug-in devices that connect to Wi-Fi and allow users to operate other devices by controlling whether electrical current flows from the wall outlet differ from wearable smart devices for classification purposes, Customs and Border Protection said in a Jan. 21 ruling, released last week. SDI Technologies argued the “SmartPlugs” deserve a similar classification as Fitbit fitness trackers that connect to mobile phones through Bluetooth. The Fitbit trackers were classified in heading 8517 due to the data transmission functions, but the plugs provide for different functions. “To the extent that data is transmitted from the application to the SmartPlug, it is in service of the primary function of controlling the electrical current to the connected appliance,” the agency said. “The transmission of data is not a function of the SmartPlugs,” it said, concluding the devices “provide electric control of electrical devices connected to them and thus are properly classified under heading 8537.” The applicable subheading, 8537.10.9, includes a 2.7 percent duty rate, and is subject to Section 301 tariffs on China, the agency said.
Nearly 140 countries and “jurisdictions,” working through the Organisation for Economic Co-operation and Development, “reaffirmed” their commitment “to reach a consensus-based long-term solution to the tax challenges arising from the digitalisation of the economy,” said OECD Friday. Their goal is to reach an agreement by year's end, it said. Tech groups back obviating the need for France’s digital services tax and similar measures cropping up elsewhere, which they say can harm U.S. interests (see 2001020036). “We continue to support the OECD process as the best way to resolve this important issue and urge all nations to pursue the ongoing negotiations in a spirit of international cooperation,” said the Information Technology Industry Council.
The White House Friday issued an executive order for “ensuring safe and lawful e-commerce.” Officials cited the exploitation of smaller express-carrier or international mail packages “by traffickers to introduce contraband into the United States” and foreign exporters evading customs duties and fees.
The U.S. effort to box out Huawei shows how complex and intertwined the issues are, said the Asia Society Policy Institute president and a former deputy secretary of state. ASPI President Kevin Rudd, a former prime minister of Australia, said many in the U.S. semiconductor industry told him their ability to reinvest at the scale they need to remain dominant in the latest advances “hangs in part on their ability to export to China.” He asked, if the government bans those exports, will it “then step in to supplement on the order of tens of billions each year?” Rudd and ex-U.S. Deputy Secretary of State John Negroponte discussed the U.S.-China relationship at an ASPI event Tuesday. Negroponte said it's revealing that the Pentagon is resisting Commerce Department moves to restrict exports to Huawei. “It’s the Department of Defense finally calling to our attention this issue is more complex than it may seem. This technological war is going to be complicated,” he said. The U.S. makes 45 percent of semiconductors; China, 5 percent. That same day, the U.K. announced it won't bar Huawei from its 5G networks but will ban it from the “core” of those networks (see 2001280074). “Sounds like a great British fudge to me,” said Rudd.
FCC Commissioner Mike O’Rielly said he agrees broadly with calls by President Donald Trump at the World Economic Forum in Davos, Switzerland, last week, for changes in the U.S. relationship with organizations like the World Trade Organization. The same could apply to the ITU and the World Radiocommunication Conference, O’Rielly said. “I defer on trade policy, but @realDonaldTrump & Admin is 100% right that U.S. must demand much, much more out international organizations,” O’Rielly tweeted Tuesday: “My views on the WRC & @ITU are exactly in line with this: WRC/ITU must dramatically improve or U.S. should find new structure.” O’Rielly said he views last year’s WRC as mixed for U.S. interests (see 1912180045).