The International Business Transactions Blog

Exon-Florio Mandatory Filing Rule Now Tied to Export Control Analysis

By Yinan Guo
Law Student Editor

Under the Exon-Florio provision of the 1950 Defense Production Act, the President is authorized to block any foreign merger with, or acquisition of, a U.S. business that would endanger U.S. national security.  That provision gives U.S. business firms the option of filing a voluntary, prior notification to the Committee on Foreign Investment in the United States (CFIUS) to determine if CFIUS has the intention of blocking the merger or acquisition.

In 2018, Congress passed the Foreign Investment Risk Review Modernization Act (FIRRMA), which created a class of mergers and acquisitions that triggered a mandatory notification requirement to CFIUS. Under FIRRMA, a U.S. business that has access to: (i) critical technology, (ii) critical infrastructure, or (iii) sensitive personal data of U.S. citizens is deemed a “TID U.S. business” and cannot be controlled or acquired by a foreign person without CFIUS approval.

On September 15, 2020, the Department of the Treasury published a Final Rule modifying the requirement for mandatory filing to the CFIUS before consummating foreign investments in U.S. businesses. Effective October 15th, whether a CFIUS filing is required depends on how the U.S. export control rules regulate the underlying critical technology of the U.S. business.

Under the new rule, a CFIUS filing is required when a foreign merger or acquisition would result in a foreign government acquiring a substantial interest in a TID U.S. business. In addition, the new rule mandates a filing when a private person seeks to acquire control or ownership of a U.S. business and the following requirements are met: (i) a TID U.S. business is involved, (ii) that business deals in critical technologies for which a “U.S. regulatory authorization” would be required for the export or reexport of such technology; and (iii) the foreign investor would have effective control over the business or access to its export-controlled technologies. The new rule would also require notification when the merger or acquisition is designed to evade or circumvent the mandatory notification requirement.

A “U.S. regulatory authorization” is defined as an export license required under any of the following U.S. export control regimes: (i) the International Traffic in Arms Regulations (ITAR); (ii) Export Administration Regulations (EAR); (iii) regulations governing assistance to foreign atomic energy activities; or (iv) regulations governing the export or import of nuclear equipment and material. Anyone holding at least 25% of voting interest in a foreign investor that would control a TID U.S. business, gain access to its export-controlled technologies, or attempts to evade mandatory notification requirement should be analyzed for export authorization purposes.

Previously, the access of a foreign person to regulated technologies was governed by the applicable export regulations (ITAR, EAR, etc.) and reviewed by the applicable regulatory agencies (Directorate of Defense Trade Controls, Bureau of Industry and Security, etc.). As of October 2020, foreign investments involving such technologies are also reviewed by CFIUS, regardless of whether an actual transfer of technology or actual foreign access to the technology will occur.

WTO Dispute Settlement and Pandemic Responses

By Professor Alexandra Harrington
University of Albany School of Law

Since it was established, the World Trade Organization (WTO) Dispute Settlement Body (DSB) has functioned as a site of dispute resolution between Member States. As a general matter, the DSB has jurisdiction to hear complaints arising under the WTO’s treaty instruments alone, and generally the legal tenets and terms which can be used by the DSB’s panels and appellate panels are bounded by these treaty instruments. However, a line of complaints beginning with the Shrimp-Turtle dispute has steadily introduced outside environmental and health concerns into the ambit of the DSB. Often, this has been done in the context of claims regarding public health and safety, such as those allowed under GATT article XX, and expanded from a narrow focus to take in a broader range of environmental and environmental health issues.

More recently, in China—Measures Related to the Exportation of Rare Earths, Tungsten and Molybdenum, the European Union, Japan and the United States challenged restrictions on the exportation of rare earths minerals from China. China asserted that these restrictions fell under the GATT article XX exceptions, because they were claimed to serve the purpose of protecting the environment and natural resources. While the Panel Report stressed that environmental concerns could fall within the legitimate framework of an article XX exception, these circumstances must be thoroughly articulated and connected to the purposes and implementation of the contested legislation. In this context, the Panel Report found that the measures were not the least restrictive and failed the legal test, noting “what was missing was an established, articulable nexus between the export restrictions put in place by the Chinese government and the environmental and health damage it was purportedly seeking to rectify and prevent.”

In Korea—Import Bans, and Testing and Certification Requirements for Radionuclides, Japan challenged restrictions on and certification requirements for fish and agricultural products which had been placed on its goods by the Republic of Korea in the wake of nuclear contamination from the Fukushima disaster. Recognizing the inherent need to balance trade law with the protection of short and long-term health concerns, the Panel noted that national decisions such as those made by Korea must be reviewed using information available at the time and can be viewed on a sliding scale of impact duration. With this in mind, the Panel noted that responsive measures in this context should be adjusted based on available information and that overly broad protective measures could not be sustained despite the potential for health impacts.

This background has the potential to become increasingly important in the future, when issues of COVID-19-related import/export restrictions and post-pandemic recovery measures have a significant potential to generate international trade disputes. At the beginning of the pandemic, some WTO member states (including the United States) restricted or banned exports of personal protective equipment (PPE), foodstuffs, and other vital supplies.  At the same time, some states imposed higher thresholds, and often bans, on imports from China. Some measures have been rescinded; however, it is possible that such measures will increase during the predicted second wave of the pandemic. At the same time, many WTO member states have adopted pandemic and post-pandemic economic measures intended to stimulate the national economy and, in some instances, incorporate international and national environmental commitments in recovery planning. What is unclear is the level to which these measures could be claimed to violate WTO treaty law, for example regarding competition and subsidies.

Under a strict reading of international trade law, these measures could be seen as violative of essential terms and requirements. However, in light of the extraordinary occurrence of a pandemic and set against the progressive application of GATT article XX exception construction in the context of environment and public health concerns, it is possible to envision a situation in which the WTO DSB’s findings incorporate far more than strict treaty law analysis.

Update on U.S. FTA Negotiations with Japan, EU, U.K.

By Yinan Guo
Law Student Editor

Since 2018, the United States has long been negotiating separate free trade agreements (FTAs) with Japan, the European Union (EU), and the U.K. This post relates the current status of these negotiations.

U.S.-Japan FTA

In 2019, the United States and Japan concluded two trade agreements pertaining to agricultural products and digital trade. Before starting these negotiations, the Office of the U.S. Trade Representative (USTR) specifically identified addressing nontariff barriers to imports of U.S. automobiles as a negotiating objective. Yet, automobiles and automobile parts were not included in the 2019 trade talks. In June 2020, USTR Robert Lighthizer said that trade talks with Japan had been delayed due to the pandemic, but that they would likely resume in a few months. The two sides intend to continue negotiating customs duties, barriers to trade in services and investment, and other trade restrictions. As of today, no formal negotiation has resumed.


In 2020, trade talks between the United States and the EU stalled due to escalating trade tensions caused by Trump’s pressure to cooperate with U.S. economic and trade sanctions on Iran and other countries and new U.S. barriers against EU metal imports. Some progress was made in August when the two sides reached an agreement to end EU tariffs on U.S. live and frozen lobster products. In exchange, the United States agreed to reduce tariffs on $160 million worth of EU goods. However, reaching a comprehensive US-EU free trade agreement is still unlikely in the near future. In June 2020, Ambassador Lighthizer commented that a trade deal with the EU is “not looking good in the short term,” citing the EU’s agriculture policy as a key sticking point. Before restarting trade talks with the United States in 2019, the EU Council had also made it clear that trade negotiations cannot be concluded as long as the tariffs on EU steel and aluminum exports remain in place.


Formal trade negotiations between the United States and United Kingdom started on May 5, 2020. The fourth round of trade talks were concluded in September, and the fifth round is expected to take place in mid- to late October. During the fourth round of trade talks, both sides exchanged their first tariff offers, discussed details regarding market access, and continued to have detailed textual discussions. Specific subjects covered in this round of trade talks include sanitary and phytosanitary measures, customs and trade facilitation, competition law, technical barriers to trade, market access, financial services, good regulatory practices, rules of origin, investment, economics, cross border trade in services, industrial subsidies, trade remedies, and state-owned enterprises. Currently, the two sides are reconciling texts in the majority of the chapter areas. Discussions between major rounds of negotiation were schedule on telecommunications, intellectual property, market access, and rule of origin. The U.K. Secretary for International Trade Elizabeth Truss revealed that the UK would like to reach a trade agreement with the US by mid-2021.

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