June 29, 2018 / 10:34 PM / 4 months ago

U.S. Commerce Dept says export controls to align with security review legislation

WASHINGTON (Reuters) - The U.S. Commerce Department said on Friday it has begun a review of export controls that will be aligned with new legislation to strengthen national security reviews of foreign acquisitions of American firms, rather than China-specific curbs.

In a statement to Reuters, the department said the review would establish changes to the controls “based on risks associated with particular technologies, destinations and end-uses among other relevant factors.”

The shift of focus for export controls from China-specific curbs to a broader set of tightened controls based on language in the Foreign Investment Risk Review Modernization Act (FIRRMA) follows President Donald Trump’s decision on Wednesday to do the same for investment restrictions.

The Commerce Department said the review “aligns with FIRRMA’s requirement to review emerging and foundational technologies essential to the national security of the United States.”

Different versions of the legislation have passed the U.S. Senate and House of Representatives, and negotiations over a final version are expected to start in the coming weeks.

The bills give enhanced powers to the interagency Committee on Foreign Investment in the United States (CFIUS) to review different types of transactions for national security risks, including minority stakes and joint ventures involving foreign partners as well as property purchases near U.S. military bases.

The legislation also requires the update and enhancement of U.S. controls on leading-edge technologies, including developing a list of new, emerging technologies to be controlled that were not contemplated when existing rules were drafted.

The House and Senate bills do not specifically list targeted technologies, but trade law experts have said that artificial intelligence technologies, robotics and autonomous vehicles are likely to be added to the non-export list.

These are among 10 high-technology sectors targeted for development under Beijing’s “Made in China 2025” industrial plan, which itself is a focus of planned Trump administration tariffs on Chinese goods.

Because these new export control rules could take years to put in place once the legislation passes, the Commerce Department is expected to take interim actions to strengthen export controls, an administration official said.

Reporting by David Lawder; Editing by Tom Brown and David Gregorio

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