Export Controls
Export Controls
The US government has long regulated the export of defense articles and services, as well as “dual-use” US-origin civilian products, materials, technology, technical data and software that have potential military applications. Multiple administrations have worked over the last two decades to make the regime more impactful in response to advances in technology, a changing national security environment and new perceived threats. New legislation and regulations since 2018 have reinforced the traditional focus of export control efforts and also expanded their reach to new strategic goals.
In amending its regulations to implement the Export Control Reform Act, the US Commerce Department is spearheading a process to identify and control the export of emerging and foundational technologies. Over the last several years alone, the US Commerce Department has expanded its restrictions on the export of semiconductor manufacturing equipment and advanced semiconductor chips; launched the Disruptive Technology Strike Force designed to protect US advanced technologies from being illicitly acquired and used by nation state adversaries; continued penalty assessments; and, undertaken multiple enhancements of its voluntary self-disclosure process. Of particular focus are advanced semiconductors, supercomputing hardware, quantum technologies, hypersonic technologies, military bioscience technologies and advanced aerospace technologies.
In addition, “critical technologies” have been identified through separate legislation that require approval for foreign investment by the Committee for Foreign Investment in the United States. In recent years, foreign investments involving critical technologies have comprised more than 60 percent of those reviewed by the Committee. A specific emphasis has been placed on advanced semiconductors, supercomputing hardware, quantum technologies, hypersonic technologies, military bioscience technologies and advanced aerospace technologies.
Authority
Certain US-origin goods and services require a license before they can be exported or re-exported to certain foreign countries. US export control laws also restrict “deemed exports,” or the transfer of technology or technical data within the United States to a person who is a non-US national. Exports are regulated by the US Department of State, under the Arms Export Control Act, and the US Department of Commerce, under the Export Control Reform Act. New legislation and regulations over the last several years have expanded the reach of export controls, making them also an additional tool for controlling foreign direct investment. Export controls are not trade actions but do restrict the movement of goods and services.
Penalties for noncompliance are significant. Criminal penalties for violations of the Arms Export Control Act can include fines up to $1,000,000, imprisonment up to 10 years prison, or both. Civil penalties can include fines up to $500,000 per violation, as well as seizure and forfeiture of goods and revocation of exporting privileges. Criminal penalties for violations of the Export Control Reform Act can include fines up to $1,000,000 or five times the value of the export, whichever is greater, and up to 20 years in prison. Civil penalties include fines up to $300,000 per violation or twice the value of the transaction, whichever is greater. Other penalties include loss of export privileges and fines ranging from $10,000 to $120,000 per violation.
