The deadline for the first round of public comments on the future and scope of export controls on emerging technologies under the overhauled Committee of Foreign Investment in the United States is fast-approaching—and trade lawyers say many companies that have a stake in the matter are staying quiet and watching from the sidelines.

The U.S. Department of Commerce's Bureau of Industry and Security has set a Jan. 10 deadline for receiving comments on the advanced notice of proposed rulemaking for “Review of Controls for Certain Emerging Technologies.”  The agency will accept a second round of comments after issuing a proposed rule, which is expected to occur later this year, concerning “emerging and foundational technologies.” Under the National Defense Authorization Act for Fiscal Year 2019, those are technologies “essential to the national security of the United States.”

With eight days remaining before the door closes on the initial comment period, only about 40 comments had been submitted. And several of the comments didn't even address export controls and instead had asked the government to extend the comment period beyond the original Dec. 19 deadline.

But even after the extension was granted, many companies have not weighed in on the issue. Richard Matheny, a partner in Goodwin Procter's Washington, D.C., office who heads the firm's global trade practice, said he was “surprised at how few have expressed any interest in putting in comments.”

One of the few in-house leaders who submitted a substantive comment is Joel Margolis, general counsel and executive vice president of government affairs for Virginia-based Subsentio, which helps communication service providers comply with their legal obligations to assist law enforcement by reviewing and validating court surveillance orders and implementing surveillance, among other services, according to its website.

Margolis wrote that advanced surveillance technology should be classified to prevent foreign governments or terrorists from using the tech against the United States. But he suggested that export controls on the technology needs to be “streamlined to operate more efficiently than current controls,” which would allow American companies to develop new surveillance tech without being delayed by regulations.  

He proposed that the government establish a trusted surveillance tech vendor program modeled after the U.S. Customs and Border Protection's trusted traveler programs. Vendors would have to meet certain criteria, such as being 100 percent American-owned, and agreeing to undergo periodic government audits. Once certified, the vendor would have blanket authority to export its products for five years.

Chris Rowen, CEO and co-founder of BabbleLabs Inc., a Silicon Valley startup focused on artificial intelligence, commented that aggressive export restrictions on AI tech would cause U.S. companies to fall behind their international competitors, who would continue to collaborate without their American counterparts.

He urged the government to focus export controls on defense and aerospace tech, but ease up on restricting “early stage technologies,” such as brain-computer interfaces and molecular robotics, and also “mainstream and broadly applicable technologies,” which includes AI.

“I believe it is imperative not to over-constrain exports of these technologies because participation in the mainstream consumer technology markets is essential to long-term U.S. competitiveness in these and related technologies,” Rowen wrote.

Most of his clients who have decided against participating in the rule-making process at this point are biotech startups that lack the resources to craft a comment with the assistance of counsel. Meanwhile, some companies that have the resources to comment have instead adopted a wait-and-see approach.

Matheny would like to see more companies follow Margolis' and Rowen's lead.

“It's sort of the tragedy of the commons,” he said. “Everyone's assuming that someone else is paying attention to it.”

Kevin Wolf, a partner in the international trade practice at Akin Gump Strauss Hauer & Feld in Washington, D.C., said about 60 percent of his clients aren't commenting and there are three main reasons why: they are waiting to read the proposed rule; they don't have time to comment; or they believe the process is meaningless.

“I'm optimistic and confident that career officials will take seriously the comments you want to submit. I have faith in the administration to pay attention to the quality of comments coming in,” Wolf said. He served from 2010 to 2017 as assistant secretary of commerce for the export administration in the Bureau of Industry and Security.

Wolf added that the “quality of the output from the government is going to be largely dependent upon the quality of the input from the industries.”

Peter Lichtenbaum, an international trade and compliance lawyer and partner at Covington & Burling in Washington, D.C., said some of the companies that he works with want to share their views and help the government make good policy decisions. But they're hesitant to disclose trade secrets or go public with what they know about tech developments in other countries. They have asked the government to also accept private comments.

The few companies that are speaking up are mainly concerned about how unilateral export controls on tech might harm or hamstring their business, said Reid Whitten, a London-based partner at Sheppard Mullin who specializes in cross-border business regulations. He works with large multinational companies and some tech startups in California.

For the latter group, “it's a big learning curve for them to get up to speed on how export controls work,” he said. “If a new law suddenly exposes all of them, it would be really hard for them, particularly where technology sharing is involved.”

“They're taking a gamble,” he said of the companies that aren't commenting. “They may not be aware of what an existential threat this might be.”

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