The Department of Commerce, Bureau of Industry and Security recently decided to maintain the status quo in its "deemed export" rule, which imposes control of sensitive technology based on a foreign national’s most recent country of citizenship or permanent residence. In maintaining the current rule, BIS has rejected its own Office of Inspector General ("OIG") recommendation to change the rule to the foreign national’s country of birth. In its recommendation, the OIG expressed concern that the current policy allows foreign nationals from sensitive countries to obtain access to technologywithout scrutiny, as long as they maintain citizenship or permanent resident status in a country which does not require an export license. The OIG recommended that BIS amend its policy to require U.S. organizations to apply for deemed export licenses for foreign nationals born in a country where the technology transfer would require an export license, regardless of their most recent citizenship or permanent residency.
The purpose of the deemed export rule is to balance the critical need for foreign nationals in the development of dual-use technologies with the requirement to protect national security. When confronted with the proposed rule change, business leaders and universities argued that relying on the country of birth would not only be costly and overly restrictive, but would also severely impede research and innovation. After a firestorm of criticism, BIS decided not to change the rule. Instead, BIS determined that the current rule adequately protects national security because of the stringent requirements necessary to gain permanent residency or citizenship in the countries which do not require licenses for the deemed export of these dual-use technologies.
This article is presented for informational purposes only and is not intended to constitute legal advice.
