New Export Restrictions for Emerging Technologies

The U.S. Commerce Department has published new rules that will require exporters of emerging technologies to obtain a government license before proceeding with their exports. Under the Commerce Department's Export Administration Regulations ("EAR") a wide variety of items on a control list cannot be exported without a license. Those items generally have commercial applications, but they could be used for other applications that raise national security or foreign policy implications. Items on the controlled list, called the Commercial Control List ("CCL"), are identified by alphanumeric codes called ECCNs. The new rules create a series of ECCNs (called the 0Y521 series) that serve as catch-alls for emerging technologies the Commerce Department determines are of concern.

More specifically, the types of emerging technologies that will be captured are those that "provide at least a significant military or intelligence advantage" or that raise foreign policy concerns. In addition, the technologies could be embodied in a commodity, various equipment, materials, software or actual technology (drawings etc.). These new control categories will permit the government to add new items to its control list quickly and more often than is currently done. No items have yet been added based on this new rule, however.

Once items are added, their export to most countries would require a license. Sharing the technology with foreign-national employees who are not green card holders will also likely require a license. Commerce says that the standard it will apply for reviewing license applications is whether the item "could contribute directly or indirectly to any country's military capabilities in a manner that would destabilize a region's military balance" contrary to U.S. interests.

This new rule could make it difficult for companies that generate new technologies to appropriately plan for international sales and development. A company may expect to market a technology globally, but those plans could be hindered by the government learning of the technology and quickly deciding to prevent its export. As cutting edge companies develop new technologies, they should consider whether the government might take an interest and whether a preemptive contact with the government would be appropriate.