The U.S. Government Seeks Input on Licensing Rules for Information Tech Security

By: Bruce G. Kreeger

By DAVID SHEPARDSON AND Karen Freifeld – U.S. News and World Report

WASHINGTON (Reuters) – On March 26th, The Biden administration said it wants new public input on establishing licensing or other procedures to help companies comply with a sweeping new rule targeting Chinese technology firms.

On Monday, the U.S. Commerce Department allowed a regulation issued under then-President Donald Trump in January to take effect over objections from U.S. business groups.

Days before Trump left office in January, the Commerce Department issued interim final rules aimed at addressing information and communications technology supply (ICTS) chain concerns posed by China, Russia, Iran, North Korea, Cuba, and Venezuela

The regulation said Commerce would adopt licensing or other pre-clearance procedures by May 19th.

“It has become apparent additional public input is needed,” the Commerce Department said Friday, adding it “is seeking input into several aspects of a potential voluntary licensing or pre-clearance process.”

The rule stemmed from a 2019 Trump executive order that said foreign adversaries were “creating and exploiting vulnerabilities in information and communications technology and services … In order to commit malicious cyber-enabled actions, including economic and industrial espionage.”

“It gives me some comfort they’re going to take their time and do it in a very thoughtful and methodical way,” said Washington-based lawyer Judith Lee, who specializes in international trade. “It’s extremely broad and that’s what makes it very scary for any type of internet or communications technology company.”

The U.S. Chamber of Commerce and other business groups said the regulation gives the U.S. government “nearly unlimited authority to intervene in virtually any commercial transaction between U.S. companies and their foreign counterparts that involves technology, with little to no due process.”

In a recent letter, the U.S. Chamber had urged the Biden administration to suspend the rule, calling it “highly problematic,” and added it impose “enormous costs.”

The Chamber said licensing was a good idea, but “the enormous number of transactions each year… will limit the ability of this program to review transactions in a timely manner.”

Last week, the Commerce Department disclosed it served subpoenas on multiple Chinese companies that provide ICTS services in the United States to see if they pose national security risks.

Edited by Bruce G. Kreeger
Bruce G. Kreeger is the President of Clarity Technologies Group, LLC (Clarity) and is an industry veteran with over 40 years in the industry.
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