In a widely anticipated move, the U.S. Department of Commerce (“Commerce”) announced an interim final rule (the “Interim Rule”) that designates China, Russia, North Korea, Iran, Cuba, and Venezuela as national security threats and prohibits U.S. companies from buying six types of communications infrastructure products and services from them. The Interim Rule implements President Trump’s Executive Order on Securing the Information and Communications Technology and Services Supply Chain (the “Executive Order”). This latest measure marks a key milestone in the Trump Administration’s ongoing trade war against China, and directly impacts U.S. communications providers who continue to use Huawei products and other Chinese equipment.
The Interim Rule will take effect 60 days after publication in the Federal Register — likely in late March or early April — and Commerce is committed to issuing a subsequent final rule in which the department will consider and respond to additional comments received. Commerce will also implement procedures for a licensing process 120 days from publication.
The Executive Order empowers the Secretary of Commerce to prohibit certain Information and Communications Technology and Services (“ICTS”) Transactions 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 the national security of the United States. Under the Executive Order, ICTS means “any hardware, software, or other product or service primarily intended to fulfill or enable the function of information or data processing, storage, retrieval, or communication by electronic means, including transmission, storage, and display.” The Executive Order defines “foreign adversary” as “any foreign government or foreign non-government person engaged in a long-term pattern or serious instances of conduct significantly adverse to the national security of the United States or security and safety of United States persons.” This broad definition gives Commerce significant discretion to restrict the use of foreign ICTS in U.S. telecom networks.
The Interim Rule enables Commerce to promulgate regulations to create the processes and procedures that the department will use to identify, assess, and address ICTS transactions that raise national security concerns; the criteria for evaluating problematic transactions have not yet been developed. Interested stakeholders are invited to submit public comments on these policies and procedures.
We believe that that the Biden Administration will maintain an aggressive stance towards ICTS from the six blacklisted countries. If you have questions or concerns about the government’s ongoing crackdown on Chinese and other foreign telecom products and services, or would like assistance with filing public comments in the pending Commerce proceeding, please contact Michael P. Donahue, Esq., at (703) 714-1319, or firstname.lastname@example.org.