Background

The Bureau of Industry and Security is seeking public input by April 28 on the implementation of a licensing or other pre-clearance process that would allow parties seeking to engage in certain transactions involving information and communications technology and services (ICTS) to obtain a license before engaging in or continuing to engage in any such transactions. While BIS had committed to implement such a licensing system by May 19, the agency now states that this system will not be in place by that date.

A May 2019 executive order authorized BIS to prohibit imports and other transactions in ICTS that have been designed, developed, manufactured, or supplied by persons owned by, controlled by, or subject to the jurisdiction or direction of foreign adversaries and that pose an undue or unacceptable risk to U.S. national security. A January 2021 interim final rule created the processes and procedures BIS will use to identify, assess, and address such transactions. The rule also identified China (including Hong Kong), Russia, Iran, North Korea, Cuba, and Venezuelan politician Nicolás Maduro as foreign adversaries, noting that this list may be revised at any time.

In response to requests for a mechanism allowing entities to seek pre-approval of, and obtain “safe harbor” for, their ICTS transactions, BIS is looking to implement a voluntary licensing or pre-clearance process that reduces uncertainty. The agency is interested in receiving information on a range of issues related to such a process, including the following.

- whether the CFIUS and BIS processes are useful models for an ICTS transaction licensing or pre-clearance process, as well as any specific factors or aspects of the CFIUS and BIS process that the DOC should consider

- benefits and disadvantages of various approaches, approaches that would be most appropriate given the nature of ICTS transactions, and implementation to ensure that national security is protected

- consideration provided to small entities in the licensing or other pre-clearance process that would not impact the goal of protecting national security

- categories or types of ICTS transactions described in 15 CFR 7.3 or within the interim final rule that should or should not be considered for a license or pre-clearance, as well as categories or types of ICTS transactions that should be prioritized

- whether the licensing or pre-clearance process should be structured differently for distinct categories or types of ICTS transactions

- whether a license or pre-clearance should apply to more than a single ICTS transaction, such as a license that applies to multiple transactions from a single entity that is engaged in a long-term contract for ICTS

- categories of information that should be required and not required (e.g., technical, security, operational)

- whether the DOC should issue decisions on a shorter timeframe if that could result in fewer licenses or pre-clearances being granted

- ways to assess the potential for mitigation of an ICTS transaction in considering whether to grant a license or pre-clearance for that transaction

- process that could be enacted to avoid invalidation of a license/pre-clearance if a request is approved but the subject ICTS transaction is subsequently modified

- whether holders of a license/pre-clearance should have the opportunity to renew it rather than reapply, as well as any factors to be considered in a renewal assessment and the appropriate length of time between renewals

For more information, please contact Kristine Pirnia.

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