On October 5, 2020, the U.S. Commerce Department's Bureau of Industry and Security (BIS) released a final rule adding six recently developed or developing technologies to BIS's Export Administration Regulations' (EAR) Commerce Control List (CCL). The newly controlled technologies are hybrid additive manufacturing/computer numerically controlled tools; specific computational lithography software; certain technology for finishing wafers for 5nm production; limited digital forensic tools; certain software for monitoring communications from a telecommunications service; and sub-orbital aircraft. These emerging technologies are subject to multilateral controls pursuant to the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies, a 42-member country export control regime; all 42 member countries are controlling these emerging technologies. The listing also addresses BIS's statutory duty to designate emerging technologies pursuant to the Export Control Reform Act (ECRA) and BIS's November 2018 Advanced Notice of Public Rulemaking about the designation of emerging technologies that are essential to U.S. national security.
According to the U.S. Department of Commerce, BIS has now implemented new controls on 37 emerging technologies. In addition to the six new designations, BIS has added controls on 24 chemical weapons precursors, discrete microwave transistors, continuity of operation software, post-quantum cryptography, underwater transducers designed to operate as hydrophones, air-launch platforms, and geospatial imagery software. The industries likely affected most by the new controls are aerospace, biotechnology, chemical, electronics, encryption, geospatial imagery, and marine. As BIS promised, the emerging technologies are narrowly tailored and almost all subject to the multilateral controls.
The Emerging Technologies
As described below, the rule adds one new export control classification number (ECCN) to CCL and revises five other ECCNs.
- Hybrid additive manufacturing (AM)/ computer numerically controlled (CNC) tools controlled under ECCN 2B001. The rule clarifies that machine tools that have an additive manufacturing capability in addition to a turning, milling, or grinding capability may be included in ECCN 2B001. Thus, machine tools classified under ECCN 2B001 may remain classified under that ECCN even when additive manufacturing capabilities are added to the equipment. The rule does not control additive manufacturing equipment in general. The ECCN 2B001 items are subject to national security, nuclear non-proliferation, and anti-terrorism controls.
- Computational lithography software designed for the fabrication of extreme ultraviolet (EUV) masks added to ECCN 3D003: ECCN 3D003 has been expanded to cover specific software that is needed for EUV-lithography including that related to three-dimensional (3D) effects, mask-shadowing effects, direction of illumination effects, long range flare effects, proximity effects, stochastic effects in resist, and source-masks optimization. This software is required to make optimized photoresist patterns on wafers and is subject to national security and anti-terrorism controls.
- Technology for finishing wafers for 5nm production control under new ECCN 3E004: The rule adds ECCN 3E004 to the CCL; ECCN 3E004 controls technology for the production of substrates for high-end integrated circuits; they are intended to apply to wafer for 5 nm production. The controlled technologies include technology required for slicing, grinding, and polishing of 300 mm diameter silicon wafers to achieve certain criteria, as well technology to minimize the flatness, or SFQR, and the surface defect, Localized Light Scatter (LLS). The technologies are subject to national security and anti-terrorism controls.
- Digital forensics tools that circumvent authentication or authorization controls on a computer (or communications device) and extract raw data added to ECCN 5A004: BIS expanded ECCN 5A004 to control hardware that can quickly analyze a device and recover protected information, including by breaking, manipulating, exploiting, and/or bypassing security measures which the manufacturer has installed on a device. This new ECCN, 5A004.b, is not intended to control items that extract unprotected data on a device, production or test equipment, system administrator tools, or tools that are used for retail purposes such as unlocking mobile phones. Corresponding controls on software were added to 5D002. The items are subject to national security and anti-terrorism controls.
- Software for monitoring and analysis of communications and metadata acquired from a telecommunications service provider via a handover interface added to ECCN 5D001: BIS added ECCN 5D001.e which covers software specially designed or modified for use by law enforcement to analyze the content of communications or metadata acquired from a handover interface. This software must provide the ability for both: 1) execution of searches on the basis of hard selectors of either the content of communication or metadata acquired from a communications service provider using a 'handover interface' and 2) mapping of the relational network or tracking the movement of targeted individuals based on the results of searches on content of communication or metadata or searches. This new entry does not control network management tools or banking software. The software is subject to national security and anti-terrorism controls.
- Sub-orbital crafts added to ECCN 9A004.h: BIS has added sub-orbital crafts to the controls that previously applied to space launch vehicles and "spacecraft" in the CCL's Category 9. A sub-orbital craft is designed to operate above the stratosphere and land on Earth without completing an orbit. Therefore, it does not meet the definition of "spacecraft", which is limited to satellites and space probes. The crafts are subject to national security, regional stability, and anti-terrorism controls.
Implications for Foreign Investment into U.S. Businesses
In addition to being important for ensuring compliance with export control regulations, including those covering development of these technologies in the United States by foreign persons, the publication of the new controlled technologies is also important in determining whether a filing with the Committee on Foreign Investment in the United States (CFIUS) is required or advisable. Any U.S. businesses that designs, tests, fabricates, develops, produces, or manufactures any of the newly controlled items and takes foreign investment may be subject to mandatory filings with CFIUS; this is irrespective of whether the U.S. business exports the controlled items. Significant penalties may be imposed for failure to make a mandatory filing. Thus, it is essential that any U.S. business that may be accepting any foreign investment, whether directly or indirectly, verify the export classification of its products, software, and technologies and ensure whether the foreign investment, including minority positions, are subject to mandatory or discretionary CFIUS filings.