November 19, 2018

U.S. Government to Define “Emerging Technologies,” Impacting CFIUS and Export Controls

On November 19, 2018, the Department of Commerce published an Advanced Notice of Proposed Rulemaking (ANPR) seeking public comment on how to identify certain “emerging technologies” that are essential to U.S. national security. The ANPR identifies 14 technology categories under consideration, including biotechnology, artificial intelligence, data analytics, robotics, and others. 

The ANPR does not yet change the current law; however, after comments are received and the rule takes effect, these “emerging technologies” will be treated as “critical technologies” under the Committee on Foreign Investment in the United States’ (CFIUS) new Pilot Program, subjecting some foreign investments in certain U.S. businesses that deal in “emerging technologies” to a 45-day pre-investment, mandatory CFIUS declaration requirement and review process. 

The resulting regulations would also implement, in part, the Export Control Reform Act of 2018’s authorization to establish controls on the export, reexport, or transfer of “emerging and foundational technologies.” At a minimum, such new controls would impose a license requirement applicable for the export of “emerging technologies” to countries against which the United States maintains an arms embargo, including China.   

The ANPR identified 14 general categories of technology within which the Commerce Department would determine whether specific “emerging technologies” are essential to the national security of the United States. These are:

  1. Biotechnology, such as:
    • Nanobiology;
    • Synthetic biology;
    • Genomic and genetic engineering; or
    • Neurotech.
  2. Artificial intelligence (AI) and machine learning technology, such as:
    • Neural networks and deep learning (e.g., brain modelling, time series prediction, classification);
    • Evolution and genetic computation (e.g., genetic algorithms, genetic programming);
    • Reinforcement learning;
    • Computer vision (e.g., object recognition, image understanding);
    • Expert systems (e.g., decision support systems, teaching systems);
    • Speech and audio processing (e.g., speech recognition and production);
    • Natural language processing (e.g., machine translation);
    • Planning (e.g., scheduling, game playing);
    • Audio and video manipulation technologies (e.g., voice cloning, deepfakes);
    • AI cloud technologies; or
    • AI chipsets.
  3. Position, Navigation, and Timing (PNT) technology.
  4. Microprocessor technology, such as:
    • Systems-on-Chip (SoC); or
    • Stacked Memory on Chip.
  5. Advanced computing technology, such as:
    • Memory-centric logic.
  6. Data analytics technology, such as:
    • Visualization;
    • Automated analysis algorithms; or
    • Context-aware computing.
  7. Quantum information and sensing technology, such as:
    • Quantum computing;
    • Quantum encryption; or
    • Quantum sensing.
  8. Logistics technology, such as:
    • Mobile electric power;
    • Modeling and simulation;
    • Total asset visibility; or
    • Distribution-based Logistics Systems (DBLS).
  9. Additive manufacturing (e.g., 3D printing);
  10. Robotics, such as:
    • Micro-drone and micro-robotic systems;
    • Swarming technology;
    • Self-assembling robots;
    • Molecular robotics;
    • Robot compliers; or
    • Smart Dust.
  11. Brain-computer interfaces, such as:
    • Neural-controlled interfaces;
    • Mind-machine interfaces;
    • Direct neural interfaces; or
    • Brain-machine interfaces.
  12. Hypersonics, such as:
    • Flight control algorithms;
    • Propulsion technologies;
    • Thermal protection systems; or
    • Specialized materials (for structures, sensors, etc.).
  13. Advanced Materials, such as:
    • Adaptive camouflage;
    • Functional textiles (e.g., advanced fiber and fabric technology); or
    • Biomaterials.
  14. Advanced surveillance technologies, such as:
    • Faceprint and voiceprint technologies.

By reference to these categories, the ANPR seeks public comment on (1) how to define emerging technology to assist identification of such technology in the future; (2) criteria to apply to determine whether there are specific technologies within these general categories that are important to U.S. national security; (3) sources to identify such technologies; (4) other general technology categories that warrant review to identify emerging technologies that are important to U.S. national security; (5) the status of development of these technologies in the United States and other countries; (6) the impact specific emerging technology controls would have on U.S. technological leadership; (7) any other approaches to the issue of identifying emerging technologies important to U.S. national security, including the stage of development or maturity level of an emerging technology that would warrant consideration for export control.

Potentially affected U.S. businesses and foreign investors — particularly in the technology and biotechnology sectors — will want to consider carefully whether their comments could be useful in shaping a rule that minimizes unnecessary regulatory burdens, including on foreign investment in the United States, the export of affected goods and technologies, cross-border collaborations, and otherwise.

A future rulemaking is expected to address “foundational technologies,” with similar regulatory consequences.

How to Comment

Comments to the ANPR must be submitted within 30 days after publication in the Federal Register, no later than December 19, 2018. Comments may be submitted at or by mail to Regulatory Policy Division, Bureau of Industry and Security, U.S. Department of Commerce, Room 2099B, 14th Street and Pennsylvania Avenue, NW, Washington, DC 20230.

If you would like additional information about the issues addressed in this client alert, please contact Rich Matheny or Jacob Osborn, or the Goodwin attorney with whom you typically consult.