Commerce Issues Notice on "Foundational Technologies" – What You Need to Know

By: Maria Alonso, Associate
Date: 09/22/2020

The long-awaited, Advanced Notice of Proposed Rulemaking ("ANPRM”) soliciting comments on the definition of, and criteria for, identifying "foundational technologies” ("the Notice) was finally issued on August 27, 2020, by the U.S. Department of Commerce, Bureau of Industry and Security ("BIS”). The deadline to submit comments is October 26, 2020.

Overall, the BIS rulemaking will have significant implications, including imposing stricter export licensing requirements for exports of foundational technologies to certain countries, such as China. Consequently, it may expand the jurisdiction of the Committee on Foreign Investment in the United States ("CFIUS”) to review certain foreign investments in U.S. businesses involved in critical technologies, which includes "foundational technologies.”


Pursuant to Section 1758 of the Export Control Reform Act of 2018 ("ECRA”), BIS and its interagency partners are tasked with identifying and establishing appropriate export controls of emerging and foundational technologies that are essential to the national security of the United States and are not already included on the Export Administration Regulations ("EAR”) Commerce Control List ("CCL”), including items controlled for anti-terrorism ("AT”) and EAR99 items, among others.

The ECRA notes that emerging and foundational technologies essential to U.S. national security are those that "may warrant stricter controls if a present or potential application or capability of that technology poses a national security threat to the United States.” After BIS identifies the emerging and foundational technologies, BIS will establish the export controls, which at a minimum will include export licensing restrictions for exports/transfers to countries subject to a U.S. arms embargo, such as, China. Consequently, U.S. and non-U.S. companies that rely on U.S. parts, software, or technology will be significantly impacted.

BIS has published three proposed and final rules regarding emerging technologies. First, on November 19, 2018, BIS published the ANPRM seeking public comments on the criteria for identifying emerging technologies. Then on January 6, 2020, BIS issued an interim final rule, which imposed licensing requirements for the export and reexport of software specially designed to automate the analysis of geospatial imagery. Most recently, on June 17, 2020, BIS published a final rule, which added controls for items in the following categories: chemical weapons precursors, human and animal pathogens and toxins, and equipment capable of use in handling biological materials. BIS is expected to publish additional rules on other emerging technologies.

It is important to note that "foundational technologies” include technologies that are already restricted under the EAR with certain Export Control Classification Numbers ("ECCNs”). On the other hand, "emerging technologies” are those that have not been subject to export controls. Therefore, as part of the process of identifying and establishing controls for foundational technologies, BIS may establish new and combine or modify existing ECCNs.

Foundational Technologies

The Notice differs from the 2018 ANPRM on emerging technologies because it does not identify industry areas nor representative technology categories for the public to comment on (readers may recall that the 2018 ANPRM included a list of 14 representative technology categories). Rather, BIS is requesting comments from industry to identify potential "foundational technologies.”

The Notice does clarify that BIS does not seek to expand the jurisdiction over technologies not currently subject to the EAR, including "foundational research” under EAR § 734.8. Specifically, BIS notes that for purposes of the Notice, the term "foundational technologies,” includes "technology,” "commodities,” and "software” as defined in the EAR. BIS will consider items not currently on the CCL (e.g., EAR99 items) or those controlled only for anti-terrorism, crime control, short supply, or United Nations embargoes.

In the Notice, BIS hints that three areas are under consideration for potential controls.

  1. Items subject to military end-use and end-user restrictions. First, BIS provides the example that foundational technologies could include items currently subject to controls for military end-use or military end-user reasons to China, Russia, and Venezuela (under Supplement No. 2 to EAR Part 774).1 These items include semiconductor manufacturing equipment and associated software tools, lasers, sensors, and underwater systems that can be tied to indigenous military innovation in those countries and may pose a national security threat. It appears that BIS is exploring the possibility of implementing "controls based on end-use and/or end-user rather than, or in addition to, technology based controls.”

  2. Items used or required to develop conventional weapons, enabling foreign intelligence collection activities, or weapons of mass destruction applications. Further, BIS also identified possible foundational technologies to include items controlled only for AT or EAR99 items that do not currently require an export license to countries subject to a U.S. arms embargo, but may be "utilized or required for innovation in developing conventional weapons, enabling foreign intelligence collection activities, or weapons of mass destruction applications.”

  3. Items subject to illicit procurement efforts. BIS will also consider whether more restrictive controls are warranted for "technologies that have been the subject of illicit procurement attempts which may demonstrate some level of dependency on U.S. technologies to further foreign military or intelligence capabilities in countries of concern or development of weapons of mass destruction.”

Public Comments

BIS seeks comments from industry on the following eight topics:

  • How to further define foundational technology to assist in the identification of such items;

  • Sources to identify such items;

  • Criteria to determine whether controlled items identified in AT-level ECCNs, in whole or in part, or covered by EAR99 categories for which a license is not required to countries subject to a U.S. arms embargo, are essential to U.S. national security;

  • The development status of foundational technologies in the United States and other countries;

  • The impact specific foundational technology controls may have on the development of such technologies in the U.S.;

  • Examples implementing controls based on end-use and/or end-user rather than, or in addition to, technology-based controls;

  • Any enabling technologies, including tooling, testing, and certification equipment, that should be included within the scope of a foundational technology; and

  • Any other approaches to the issue of identifying foundational technologies important to U.S. national security, including the stage of development or maturity level of a foundational technology that would warrant consideration for export control.

CFIUS Filings

The Notice will significantly expand the scope of companies required to file a mandatory filing with CFIUS. In brief, CFIUS filings are mandatory for certain controlling and non-controlling foreign investments in U.S. businesses involved in certain critical technologies. The definition of critical technologies includes "emerging and foundational technologies” as identified by BIS under the ECRA. Consequently, foreign investors looking to invest in U.S. businesses involved with such technologies should consider submitting comments and assess the type of CFIUS filings triggered.


BIS, through the rulemaking process, will continue to identify emerging and foundational technologies under the ECRA. It is expected that additional proposed rules seeking public comments will be published before BIS implements a final rule with the new controls on the identified foundational technologies. Prospective foreign investors and companies who deal with potential "foundational technologies” as well as those whose supply chain uses such technologies, should assess the potential impact of stricter licensing requirements and CFIUS mandatory filing requirements. Please contact Torres Law if you have any questions about this Notice or any other matters discussed in this article.

1 In April, BIS published a new final rule that among other changes, revises the EAR’s military end-use/user rule. See our previous article for more details.