skip to main content

H.R. 5841: Foreign Investment Risk Review Modernization Act of 2018

The text of the bill below is as of May 16, 2018 (Introduced).


I

115th CONGRESS

2d Session

H. R. 5841

IN THE HOUSE OF REPRESENTATIVES

May 16, 2018

introduced the following bill; which was referred to the Committee on Foreign Affairs, and in addition to the Committees on Financial Services, Energy and Commerce, Intelligence (Permanent Select), and Oversight and Government Reform, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

A BILL

To modernize and strengthen the Committee on Foreign Investment in the United States to more effectively guard against the risk to the national security of the United States posed by certain types of foreign investment, and for other purposes.

1.

Short title; table of contents

(a)

Short title

This Act may be cited as the Foreign Investment Risk Review Modernization Act of 2018.

(b)

Table of contents

The table of contents for this Act is as follows:

Sec. 1. Short title; table of contents.

Title I—Findings and Sense of Congress

Sec. 101. Findings and sense of Congress.

Title II—Definitions

Sec. 201. Definitions.

Title III—Improvements to the Operations of the Committee on Foreign Investment in the United States

Sec. 301. Inclusion of partnership and side agreements in notice.

Sec. 302. Declarations relating to certain covered transactions.

Sec. 303. Timing for reviews and investigations.

Sec. 304. Submission of certifications to Congress.

Sec. 305. Analysis by Director of National Intelligence.

Sec. 306. Information sharing.

Sec. 307. Action by the President.

Sec. 308. Factors to be considered.

Sec. 309. Mitigation and other actions by the Committee to address national security risks.

Sec. 310. Certification of notices and information.

Title IV—Modification of annual report

Sec. 401. Modification of annual report.

Title V—Resources, special hiring authority, and outreach

Sec. 501. Centralization of certain Committee functions.

Sec. 502. CFIUS resource needs.

Sec. 503. CFIUS outreach.

Title VI—Miscellaneous FIRRMA provisions

Sec. 601. Conforming amendment.

Sec. 602. Regulatory certainty for United States businesses.

Title VII—Common Sense Credit Union Capital Relief

Sec. 701. Delay in effective date.

Title VIII—Export Control Reform

Sec. 801. Short title.

Sec. 802. Definitions.

Subtitle A—Authority and administration of controls

Sec. 811. Short title.

Sec. 812. Statement of policy.

Sec. 813. Authority of the President.

Sec. 814. Additional authorities.

Sec. 815. Administration of export controls.

Sec. 816. Control lists.

Sec. 817. Licensing.

Sec. 818. Compliance assistance.

Sec. 819. Requirements to identify and control emerging, foundational, and other critical technologies in export control regulations.

Sec. 820. Review relating to countries subject to comprehensive United States arms embargo.

Sec. 821. Penalties.

Sec. 822. Enforcement.

Sec. 823. Administrative procedure.

Sec. 824. Annual report to Congress.

Sec. 825. Repeal.

Sec. 826. Effect on other Acts.

Sec. 827. Transition provisions.

Subtitle B—Anti-Boycott Act of 2018

Sec. 831. Short title.

Sec. 832. Statement of policy.

Sec. 833. Foreign boycotts.

Sec. 834. Enforcement.

Subtitle C—Sanctions Regarding Missile Proliferation and Chemical and Biological Weapons Proliferation

Sec. 841. Missile proliferation control violations.

Sec. 842. Chemical and biological weapons proliferation sanctions.

Subtitle D—Administrative authorities

Sec. 851. Under Secretary of Commerce for Industry and Security.

I

Findings and Sense of Congress

101.

Findings and sense of Congress

(a)

Findings

The Congress finds the following:

(1)

According to a February 2016 report by the Department of Commerce’s International Trade Administration, 12 million United States workers, equivalent to 8.5 percent of the labor force, have jobs resulting from foreign investment, including 3.5 million jobs in the manufacturing sector alone.

(2)

In 2016, new foreign direct investment in U.S. manufacturing totaled $129.4 billion.

(3)

The Department of Commerce’s Bureau of Economic Analysis concluded that in 2015, foreign-owned affiliates in the United States—

(A)

Contributed $894.5 billion in value added to the U.S. economy;

(B)

exported goods valued at $352.8 billion, accounting for nearly a quarter of total U.S. goods exports;

(C)

undertook $56.7 billion in research and development; and

(D)

the seven largest investing countries, all of which are United States allies—the United Kingdom, Japan, Germany, France, Canada, Switzerland, and the Netherlands—accounted for 72.1 percent of U.S. affiliate value added and over 80 percent of affiliates’ R&D expenditures.

(4)

According to the Government Accountability Office (GAO), from 2011 to 2016, the number of transactions reviewed by the Committee on Foreign Investment in the United States (CFIUS) grew by 55 percent, while agency staff assigned to the reviews increased by 11 percent.

(5)

In light of staffing constraints at CFIUS, GAO has cautioned against expanding CFIUS’s authorities precipitously. According to a February 2018 report (GAO–18–249), GAO noted: Officials from Treasury and other member agencies are aware of pressures on their CFIUS staff given the current workload and have expressed concerns about possible workload increases.. GAO concluded: Without attaining an understanding of the staffing levels needed to address the current and future CFIUS workload, particularly if legislative changes to CFIUS’s authorities further expand its workload, CFIUS may be limited in its ability to fulfill its objectives and address threats to the national security of the United States..

(6)

On March 30, 1954, Dwight David Eisenhower—five-star general, Supreme Allied Commander, and 34th President of the United States—in his Special Message to the Congress on Foreign Economic Policy, counseled: Great mutual advantages to buyer and seller, to producer and consumer, to investor and to the community where investment is made, accrue from high levels of trade and investment.. He continued: The internal strength of the American economy has evolved from such a system of mutual advantage. In the press of other problems and in the haste to meet emergencies, this nation—and many other nations of the free world—have all too often lost sight of this central fact.. President Eisenhower concluded: If we fail in our trade policy, we may fail in all. Our domestic employment, our standard of living, our security, and the solidarity of the free world—all are involved..

(b)

Sense of Congress

It is the sense of Congress that—

(1)

foreign investment provides substantial benefits to the United States, including the promotion of economic growth, productivity, innovation, competitiveness, and job creation, thereby enhancing U.S. national security;

(2)

maintaining the commitment of the United States to an open investment policy encourages other countries to act similarly and helps expand foreign markets for U.S. businesses;

(3)

the Committee on Foreign Investment in the United States, as a complement to domestic and multilateral export control regimes, plays a critical role in protecting the national security of the United States;

(4)

in order to maintain the Committee’s effectiveness and guard against mission creep, CFIUS should remain narrowly focused on confronting risks related to national security;

(5)

it is essential that the member agencies of the Committee are adequately resourced and able to hire appropriately qualified individuals in a timely manner so that CFIUS may promptly complete transaction reviews, identify and respond to evolving national security risks, and enforce mitigation agreements effectively;

(6)

the President should carry out international outreach to promote the benefits of foreign investment for global economic growth, while also assisting United States partners to address national security risks; and

(7)

it is the policy of the United States to enthusiastically welcome and support foreign investment, consistent with national security considerations.

II

Definitions

201.

Definitions

Section 721(a) of the Defense Production Act of 1950 (50 U.S.C. 4565(a)) is amended—

(1)

by striking paragraphs (2), (3), and (4) and inserting the following:

(2)

Control

The term control means the power, direct or indirect, whether or not exercised, to determine, direct, or decide important matters affecting an entity, subject to regulations prescribed by the Committee.

(3)

Covered transaction

(A)

In general

The term covered transaction means any transaction described in subparagraph (B) or (C) that is proposed, pending, or completed on or after the date of the enactment of the Foreign Investment Risk Review Modernization Act of 2018.

(B)

Transactions described

A transaction described in this subparagraph is any of the following:

(i)

Any merger, acquisition, takeover, or joint venture that is proposed or pending after August 23, 1988, by or with any foreign person that could result in foreign control of any United States business.

(ii)

The purchase or lease by, or concession to, a foreign person of private or public real estate that—

(I)

is—

(aa)

located in the United States and is, or is in close proximity to, a United States military installation; or

(bb)

itself, or is located at and will function as part of, an air or sea port;

(II)

is not a single housing unit, as defined by the Bureau of the Census;

(III)

is not in an urbanized area, as set forth by the Bureau of the Census in its most recent census, except as otherwise prescribed by the Committee in regulations in consultation with the Secretary of Defense; and

(IV)

meets such other criteria as the Committee prescribes by regulation.

(iii)

Any change in the rights that a foreign person has with respect to a United States business in which the foreign person has an investment, if that change is likely to result in foreign control of the United States business.

(iv)

Any transaction or other device entered into or employed for the purpose of evading this section, subject to regulations prescribed by the Committee.

(C)

Sensitive transactions involving countries of special concern

(i)

In general

A transaction described in this subparagraph is any investment in an unaffiliated United States business by a foreign person that—

(I)

is—

(aa)

a national or a government of, or a foreign entity organized under the laws of, a country of special concern; or

(bb)

a foreign entity—

(AA)

over which control is exercised or exercisable by a national or a government of, or by a foreign entity organized under the laws of, a country of special concern; or

(BB)

in which the government of a country of special concern has a substantial interest; and

(II)

as a result of the transaction, could obtain–—

(aa)

sensitive personal data, as defined by regulations prescribed by the Committee, of United States citizens, if such data may be exploited in a manner that threatens national security; or

(bb)

influence over substantive decisionmaking of the United States business regarding the use, development, acquisition, or release of—

(AA)

sensitive personal data of United States citizens, as described in item (aa); or

(BB)

critical technologies.

(III)

Countries of special concern

For the purposes of this subparagraph, the term countries of special concern means—

(aa)

any foreign country that is subject to export restrictions pursuant to section 744.21 of title 15, Code of Federal Regulations;

(bb)

any country determined by the Secretary of State to be a state sponsor of terrorism; and

(cc)

any country that—

(AA)

is subject to a United States arms embargo, as specified in list D:5 of Country Group D in Supplement No. 1 to part 740 of title 15, Code of Federal Regulations; and

(BB)

is identified as a country of special concern in regulations prescribed by the Committee.

(ii)

Investment defined

For the purposes of this subparagraph, the term investment means the acquisition of an equity interest, including contingent equity interest, as further defined in regulations prescribed by the Committee.

(iii)

Unaffiliated United States business defined

For the purposes of this subparagraph, with respect to an investment described under clause (i), and as further defined in regulations prescribed by the Committee, the term unaffiliated United States business means a United States business that is not subject to the same ultimate ownership of the foreign person undertaking the investment.

(iv)

Waiver

The President may waive any requirement of this subparagraph upon reporting to the Committees on Financial Services and Foreign Affairs of the House and the Committees on Banking, Housing, and Urban Affairs and Foreign Relations of the Senate that the waiver is important to the national interest of the United States, with a detailed explanation of the reasons therefor.

(D)

Transfers of certain assets pursuant to bankruptcy proceedings or other defaults

The Committee shall prescribe regulations to clarify that the term covered transaction includes any transaction described in subparagraphs (B) or (C) that arises pursuant to a bankruptcy proceeding or other form of default on debt.

(4)

Foreign government-controlled transaction

The term foreign government-controlled transaction means any covered transaction that could result in control of a United States business by a foreign government or a person controlled by or acting on behalf of a foreign government.

;

(2)

by amending paragraph (7) to read as follows:

(7)

Critical technologies

The term critical technologies means—

(A)

defense articles or defense services covered by the United States Munitions List (USML), which is set forth in the International Traffic in Arms Regulations (ITAR) (22 C.F.R. parts 120–130);

(B)

those items specified on the Commerce Control List (CCL) set forth in Supplement No. 1 to part 774 of the Export Administration Regulations (EAR) (15 C.F.R. parts 730–774) that are controlled pursuant to multilateral regimes (i.e. for reasons of national security, chemical and biological weapons proliferation, nuclear nonproliferation, or missile technology), as well as those that are controlled for reasons of regional stability or surreptitious listening;

(C)

specially designed and prepared nuclear equipment, parts and components, materials, software, and technology specified in the Assistance to Foreign Atomic Energy Activities regulations (10 C.F.R. part 810), and nuclear facilities, equipment, and material specified in the Export and Import of Nuclear Equipment and Material regulations (10 C.F.R. part 110);

(D)

select agents and toxins specified in the Select Agents and Toxins regulations (7 C.F.R. part 331, 9 C.F.R. part 121, and 42 C.F.R. part 73); and

(E)

emerging, foundational, or other critical technologies that are controlled pursuant to section 819 of the Foreign Investment Risk Review Modernization Act of 2018.

; and

(3)

by adding at the end the following:

(9)

Foreign person

The term foreign person means—

(A)

any foreign national, foreign government, or foreign entity; or

(B)

any entity over which control is exercised or exercisable by a foreign national, foreign government, or foreign entity.

(10)

Substantial interest

The term substantial interest has the meaning given to such term in regulations prescribed by the Committee, but does not include a voting interest of less than ten percent or ownership interests held or acquired solely for the purpose of passive investment.

(11)

United States business

The term United States business means any entity, irrespective of the nationality of the persons that control it, engaged in interstate commerce in the United States, but only to the extent of its activities in interstate commerce.

.

III

Improvements to the Operations of the Committee on Foreign Investment in the United States

301.

Inclusion of partnership and side agreements in notice

Section 721(b)(1)(C) of the Defense Production Act of 1950 (50 U.S.C. 4565(b)(1)(C)) is amended by adding at the end the following:

(iv)

Inclusion of partnership and side agreements

Subject to regulations prescribed by the Committee, the Committee may require a written notice submitted under clause (i) by a party to a covered transaction to include a copy of any partnership agreements, integration agreements, or other side agreements relating to the transaction, as specified in regulations prescribed by the Committee.

.

302.

Declarations relating to certain covered transactions

(a)

In general

Section 721(b)(1)(C) of the Defense Production Act of 1950 (50 U.S.C. 4565(b)(1)(C)), as amended by section 301, is further amended by adding at the end the following:

(v)

Declarations with respect to certain covered transactions

(I)

Voluntary declarations

For the purpose of expediting the review of certain covered transactions that the Committee determines are likely to pose limited risk, the Committee may prescribe regulations to permit parties to the transaction to submit a declaration with basic information regarding the transaction, unless the parties submit a written notice under clause (i).

(II)

Mandatory declarations

(aa)

In general

The Committee may prescribe regulations to require the parties to a covered transaction to submit a declaration described in subclause (I) with respect to the transaction if the transaction involves an investment that results in the acquisition, directly or indirectly, of a substantial interest in a United States business by a foreign person in which a foreign government has, directly or indirectly, a substantial interest.

(bb)

Submission of written notice as an alternative

Parties to a covered transaction for which a declaration is required under this clause may instead elect to submit a written notice under clause (i).

(cc)

Timing of submission

With respect to the regulations described under subclause (I), the Committee may not require a declaration to be submitted more than 30 days in advance of the completion of the transaction.

(III)

Penalties

The Committee may impose a penalty pursuant to subsection (h)(3)(A) with respect to a party that fails to comply with this clause.

(IV)

Committee response to declaration

(aa)

In general

Upon receiving a declaration under this clause with respect to a transaction, the Committee may, at its discretion—

(AA)

request that the parties to the transaction file a written notice under clause (i), provided that the Committee includes an explanation of the reasons for the request;

(BB)

inform the parties to the transaction that the Committee is not able to complete action under this section with respect to the transaction on the basis of the declaration and that the parties may file a written notice under clause (i) to seek written notification from the Committee that the Committee has completed all action under this section with respect to the transaction;

(CC)

initiate a unilateral review of the transaction under subparagraph (D); or

(DD)

notify the parties in writing that the Committee has completed all action under this section with respect to the transaction.

(bb)

Timing

The Committee shall take action under item (aa) within 15 days of receiving a declaration under this clause.

(cc)

Refiling of declaration

The Committee may not request or recommend that a declaration be withdrawn and refiled, except to permit parties to a transaction to correct material errors or omissions.

(V)

Regulations

In prescribing regulations establishing requirements for declarations submitted under this clause, the Committee shall ensure that such declarations are submitted as abbreviated notifications that do not generally exceed 5 pages in length.

(VI)

Investment defined

For the purposes of this clause, the term investment means the acquisition of an equity interest, including contingent equity interest, as further defined in regulations prescribed by the Committee.

.

(b)

Stipulations regarding transactions

Section 721(b)(1)(C) of the Defense Production Act of 1950 (50 U.S.C. 4565(b)(1)(C)), as amended by this section, is further amended by adding at the end the following:

(viii)

Stipulations regarding transactions

(I)

In general

In a written notice submitted under clause (i) or a declaration submitted under clause (v) with respect to a transaction, a party to the transaction may—

(aa)

stipulate that the transaction is a covered transaction; and

(bb)

if the party stipulates that the transaction is a covered transaction under item (aa), stipulate that the transaction is a foreign government-controlled transaction.

(II)

Basis for stipulation

A written notice submitted under clause (i) or a declaration submitted under clause (v) that includes a stipulation under subclause (I) shall include a description of the basis for the stipulation.

.

303.

Timing for reviews and investigations

Section 721(b) of the Defense Production Act of 1950 (50 U.S.C. 4565(b)) is amended—

(1)

in paragraph (2), by striking subparagraph (C) and inserting the following:

(C)

Timing

(i)

In general

Except as provided in clause (ii), any investigation under subparagraph (A) shall be completed before the end of the 45-day period beginning on the date on which the investigation commenced.

(ii)

Extension for extraordinary circumstances

(I)

In general

In extraordinary circumstances (as defined by the Committee in regulations), the chairperson may, at the request of the head of the lead agency, extend an investigation under subparagraph (A) for not more than one 15-day period.

(II)

Nondelegation

The authority of the chairperson and the head of the lead agency referred to in subclause (I) may not be delegated to any person other than the Deputy Secretary of the Treasury or the deputy head (or equivalent thereof) of the lead agency, as the case may be.

(III)

Notification to parties

If the Committee extends the deadline under subclause (I) with respect to a covered transaction, the Committee shall notify the parties to the transaction of the extension.

; and

(2)

by adding at the end the following:

(8)

Tolling of deadlines during lapse in appropriations

Any deadline or time limitation under this subsection shall be tolled during a lapse in appropriations.

.

304.

Submission of certifications to Congress

Section 721(b)(3)(C) of the Defense Production Act of 1950 (50 U.S.C. 4565(b)(3)(C)) is amended—

(1)

in clause (i), by amending subclause (II) to read as follows:

(II)

a certification that all relevant national security factors, including factors enumerated in subsection (f), have received full consideration.

; and

(2)

by adding at the end the following:

(v)

Authority to consolidate documents

Instead of transmitting a separate certified notice or certified report under subparagraph (A) or (B) with respect to each covered transaction, the Committee may, on a monthly basis, transmit such notices and reports in a consolidated document to the Members of Congress specified in clause (iii).

.

305.

Analysis by Director of National Intelligence

Section 721(b)(4) of the Defense Production Act of 1950 (50 U.S.C. 4565(b)(4)) is amended—

(1)

by striking subparagraph (A) and inserting the following:

(A)

Analysis required

(i)

In general

The Director of National Intelligence shall expeditiously carry out a thorough analysis of any threat to the national security of the United States posed by any covered transaction, which shall include the identification of any recognized gaps in the collection of intelligence relevant to the analysis.

(ii)

Views of intelligence agencies

The Director shall seek and incorporate into the analysis required by clause (i) the views of all affected or appropriate intelligence agencies with respect to the transaction.

(iii)

Updates

At the request of the lead agency, the Director shall update the analysis conducted under clause (i) with respect to a covered transaction with respect to which an agreement was entered into under subsection (l)(3)(A).

(iv)

Independence and objectivity

The Committee shall ensure that its processes under this section preserve the ability of the Director to conduct an analysis under clause (i) that is independent, objective, and consistent with all applicable directives, policies, and analytic tradecraft standards of the intelligence community.

;

(2)

by redesignating subparagraphs (B), (C), and (D) as subparagraphs (C), (D), and (E), respectively;

(3)

by inserting after subparagraph (A) the following:

(B)

Basic threat information

(i)

In general

The Director of National Intelligence may provide the Committee with basic information regarding any threat to the national security of the United States posed by a covered transaction described in clause (ii) instead of conducting the analysis required by subparagraph (A).

(ii)

Covered transaction described

A covered transaction is described in this clause if—

(I)

the transaction is described in subsection (a)(3)(B)(ii);

(II)

the Director of National Intelligence has completed an analysis pursuant to subparagraph (A) involving each foreign person that is a party to the transaction during the 12 months preceding the review or investigation of the transaction under this section; or

(III)

the transaction otherwise meets criteria agreed upon by the Committee and the Director of National Intelligence for purposes of this subparagraph.

; and

(4)

by adding at the end the following:

(F)

Assessment of operational impact

The Director may provide to the Committee an assessment, separate from the analyses under subparagraphs (A) and (B), of any operational impact of a covered transaction on the intelligence community and a description of any actions that have been or will be taken to mitigate any such impact.

(G)

Submission to Congress

The Committee shall include the analysis required by subparagraph (A) with respect to a covered transaction in the report required under subsection (m)(1), subject to the requirements of subsection (m)(5).

.

306.

Information sharing

Section 721(c) of the Defense Production Act of 1950 (50 U.S.C. 4565(c)) is amended—

(1)

by striking Any information and inserting the following:

(1)

In general

Any information

; and

(2)

by adding at the end the following:

(2)

Exception

Paragraph (1) shall not prohibit the disclosure of information or documentary material that the party filing such information or material consented to be disclosed to third parties.

.

307.

Action by the President

(a)

In general

Section 721(d)(2) of the Defense Production Act of 1950 (50 U.S.C. 4565(d)(2)) is amended by striking not later than 15 days and all that follows and inserting the following:

with respect to a covered transaction not later than 15 days after the earlier of—

(A)

the date on which the investigation of the transaction under subsection (b) is completed; or

(B)

the date on which the Committee otherwise refers the transaction to the President under subsection (l)(4).

.

(b)

Civil penalties

Section 721(h)(3)(A) of the Defense Production Act of 1950 (50 U.S.C. 4565(h)(3)(A)) is amended by striking including any mitigation and all that follows through subsection (l) and inserting including any mitigation agreement entered into, conditions imposed, or order issued pursuant to this section.

308.

Factors to be considered

Section 721(f) of the Defense Production Act of 1950 (50 U.S.C. 4565(f)) is amended—

(1)

in paragraph (4), by striking proposed or pending;

(2)

by striking paragraph (5);

(3)

by redesignating paragraphs (6), (7), (8), (9), (10), and (11) as paragraphs (5), (6), (7), (8), (9), and (16), respectively;

(4)

in paragraph (9), as so redesignated, by striking and at the end; and

(5)

by inserting after paragraph (9), as so redesignated, the following:

(10)

the degree to which the covered transaction is likely to threaten the ability of the United States Government to acquire or maintain the equipment and systems that are necessary for defense, intelligence, or other national security functions;

(11)

the potential national security-related effects of the cumulative control of any one type of critical infrastructure, energy asset, material, or critical technology by a foreign person;

(12)

whether any foreign person that would acquire control of a United States business as a result of the covered transaction has a history of—

(A)

complying with United States laws and regulations and prior adherence, if applicable, to any agreement or condition, as described under (l)(1)(A); and

(B)

adhering to contracts or other agreements with entities of the United States Government;

(13)

the extent to which the covered transaction is likely to release, either directly or indirectly, sensitive personal data of United States citizens to a foreign person that may exploit that information in a manner that threatens national security;

(14)

whether the covered transaction is likely to exacerbate cybersecurity vulnerabilities or is likely to result in a foreign government gaining a significant new capability to engage in malicious cyber-enabled activities against the United States, including such activities designed to affect the outcome of any election for Federal office;

(15)

whether the covered transaction is likely to expose any information regarding sensitive national security matters or sensitive procedures or operations of a Federal law enforcement agency with national security responsibilities to a foreign person not authorized to receive that information; and

.

309.

Mitigation and other actions by the Committee to address national security risks

Section 721(l) of the Defense Production Act of 1950 (50 U.S.C. 4565(l)) is amended—

(1)

in paragraph (1)—

(A)

in subparagraph (A)—

(i)

in the heading, by striking In general and inserting Agreements and conditions;

(ii)

by striking The Committee and inserting the following:

(i)

In general

The Committee

; and

(iii)

by adding at the end the following:

(ii)

Abandonment of transactions

If a party to a covered transaction has voluntarily chosen to abandon the transaction, the Committee or lead agency, as the case may be, may negotiate, enter into or impose, and enforce any agreement or condition with any party to the covered transaction for purposes of effectuating such abandonment and mitigating any threat to the national security of the United States that arises as a result of the covered transaction.

(iii)

Agreements and conditions relating to completed transactions

The Committee or lead agency, as the case may be, may negotiate, enter into or impose, and enforce any agreement or condition with any party to a completed covered transaction in order to mitigate any interim threat to the national security of the United States that may arise as a result of the covered transaction until such time that the Committee has completed action pursuant to subsection (b) or the President has taken action pursuant to subsection (d) with respect to the transaction.

;

(B)

by amending subparagraph (B) to read as follows:

(B)

Treatment of outdated agreements or conditions

The chairperson and the head of any applicable lead agency shall periodically review the appropriateness of an agreement or condition described under subparagraph (A) and terminate, phase out, or otherwise amend any agreement or condition if a threat no longer requires mitigation through the agreement or condition.

; and

(C)

by adding at the end the following:

(C)

Limitations

An agreement may not be entered into or condition imposed under subparagraph (A) with respect to a covered transaction unless the Committee determines that the agreement or condition resolves the national security concerns posed by the transaction, taking into consideration whether the agreement or condition is reasonably calculated to—

(i)

be effective;

(ii)

allow for compliance with the terms of the agreement or condition in an appropriately verifiable way; and

(iii)

enable effective monitoring of compliance with and enforcement of the terms of the agreement or condition.

(D)

Jurisdiction

The provisions of section 706(b) shall apply to any mitigation agreement entered into or condition imposed under subparagraph (A).

; and

(2)

by adding at the end the following:

(4)

Referral to President

The Committee may, at any time during the review or investigation of a covered transaction under subsection (b), complete the action of the Committee with respect to the transaction and refer the transaction to the President for action pursuant to subsection (d).

(5)

Risk-based analysis required

(A)

In general

Any determination of the Committee to refer a covered transaction to the President under paragraph (4), or to negotiate, enter into, impose, or enforce any agreement or condition under paragraph (1)(A) with respect to a covered transaction, shall be based on a risk-based analysis, conducted by the Committee, of the effects on the national security of the United States of the covered transaction, which shall include—

(i)

an assessment of the threat, vulnerabilities, and consequences to national security resulting from the transaction, as these terms are defined or clarified in guidance and regulations issued by the Committee; and

(ii)

an identification of each relevant factor described in subsection (f) that the transaction may substantially implicate.

(B)

Compliance plans

(i)

In general

In the case of a covered transaction with respect to which an agreement or condition is entered into under paragraph (1)(A), the Committee or lead agency, as the case may be, shall formulate, adhere to, and keep updated a plan for monitoring compliance with the agreement or condition.

(ii)

Elements

Each plan required by clause (i) with respect to an agreement or condition entered into under paragraph (1)(A) shall include an explanation of—

(I)

which member of the Committee will have primary responsibility for monitoring compliance with the agreement or condition;

(II)

how compliance with the agreement or condition will be monitored;

(III)

how frequently compliance reviews will be conducted;

(IV)

whether an independent entity will be utilized under subparagraph (D) to conduct compliance reviews; and

(V)

what actions will be taken if the parties fail to cooperate regarding monitoring compliance with the agreement or condition.

(C)

Effect of lack of compliance

If, at any time after a mitigation agreement or condition is entered into or imposed under paragraph (1)(A), the Committee or lead agency, as the case may be, determines that a party or parties to the agreement or condition are not in compliance with the terms of the agreement or condition, the Committee or lead agency may, in addition to the authority of the Committee to impose penalties pursuant to subsection (h)(3)(A) and to unilaterally initiate a review of any covered transaction under subsection (b)(1)(D)(iii)(I)—

(i)

negotiate a plan of action for the party or parties to remediate the lack of compliance, with failure to abide by the plan or otherwise remediate the lack of compliance serving as the basis for the Committee to find a material breach of the agreement or condition;

(ii)

require that the party or parties submit any covered transaction initiated after the date of the determination of noncompliance and before the date that is 5 years after the date of the determination to the Committee for review under subsection (b); or

(iii)

seek injunctive relief.

(D)

Use of independent entities to monitor compliance

If the parties to an agreement or condition entered into under paragraph (1)(A) enter into a contract with an independent entity from outside the United States Government for the purpose of monitoring compliance with the agreement or condition, the Committee shall take such action as is necessary to prevent any significant conflict of interest from arising with respect to the entity and the parties to the transaction.

(E)

Successors and assigns

Any agreement or condition entered or imposed under paragraph (1)(A) shall be considered binding on all successors and assigns, unless and until the agreement or condition terminates on its own terms or is otherwise terminated by the Committee in the Committee’s sole discretion.

(F)

Additional compliance measures

Subject to subparagraphs (A) through (D), the Committee shall develop and agree upon methods for evaluating compliance with any agreement entered into or condition imposed with respect to a covered transaction that will allow the Committee to adequately ensure compliance without unnecessarily diverting Committee resources from assessing any new covered transaction for which a written notice under clause (i) of subsection (b)(1)(C) has been filed, and if necessary, reaching a mitigation agreement with or imposing a condition on a party to such covered transaction or any covered transaction for which a review has been reopened for any reason.

.

310.

Certification of notices and information

Section 721(n) of the Defense Production Act of 1950 (50 U.S.C. 4565(n)) is amended—

(1)

by redesignating paragraphs (1) and (2) as subparagraphs (A) and (B), respectively, and by moving such subparagraphs, as so redesignated, 2 ems to the right;

(2)

by striking Each notice and inserting the following:

(1)

In general

Each notice

; and

(3)

by adding at the end the following:

(2)

Effect of failure to submit

The Committee may not complete a review under this section of a covered transaction and may recommend to the President that the President suspend or prohibit the transaction or require divestment under subsection (d) if the Committee determines that a party to the transaction has—

(A)

failed to submit a statement required by paragraph (1); or

(B)

included false or misleading information in a notice or information described in paragraph (1) or omitted material information from such notice or information.

(3)

Applicability of law on fraud and false statements

The Committee shall prescribe regulations expressly providing for the application of section 1001 of title 18, United States Code, to all information provided to the Committee under this section by any party to a covered transaction.

.

IV

Modification of annual report

401.

Modification of annual report

Section 721(m) of the Defense Production Act of 1950 (50 U.S.C. 4565(m)) is amended—

(1)

in paragraph (2), by amending subparagraph (A) to read as follows:

(A)

A list of all notices filed and all reviews or investigations of covered transactions completed during the period, with—

(i)

a description of the outcome of each review or investigation, including whether an agreement was entered into or condition was imposed under subsection (l)(3)(A) with respect to the transaction being reviewed or investigated, and whether the President took any action under this section with respect to that transaction;

(ii)

the nature of the business activities or products of the United States business with which the transaction was entered into or intended to be entered into; and

(iii)

information about any withdrawal from the process.

;

(2)

in paragraph (3)—

(A)

by striking critical technologies and all that follows through In order to assist and inserting critical technologies.—In order to assist;

(B)

by striking subparagraph (B); and

(C)

by redesignating clauses (i) and (ii) as subparagraphs (A) and (B), respectively, and by moving such subparagraphs, as so redesignated, 2 ems to the left; and

(3)

by adding at the end the following:

(4)

Additional contents of report

(A)

Statistics on compliance reviews conducted and actions taken by the Committee under subsection (l)(6), including subparagraph (D) of that subsection (l)(6), during that period and a description of any actions taken by the Committee to impose penalties or initiate a unilateral review pursuant to subsection (b)(1)(D)(iii)(I).

(B)

Cumulative and trend information on the number of declarations filed under subsection (b)(1)(C)(v), the actions taken by the Committee in response to declarations, the business sectors involved in the declarations which have been made, and the countries involved in such declarations.

(C)

The number of new hires made since the preceding report through the authorities described under subsection (q), along with summary statistics, position titles, and associated pay grades for such hires and a summary of such hires’ responsibilities in administering this section.

(5)

Classification; availability of report

(A)

Classification

All appropriate portions of the annual report required by paragraph (1) may be classified.

(B)

Public availability of unclassified version

An unclassified version of the report required by paragraph (1), as appropriate and consistent with safeguarding national security and privacy, shall be made available to the public. Information regarding trade secrets or business confidential information may be included in the classified version and may not be made available to the public in the unclassified version.

(C)

Exceptions to Freedom of Information Act

The exceptions to subsection (a) of section 552 of title 5, United States Code, provided for under subsection (b) of that section shall apply with respect to the report required by paragraph (1).

.

V

Resources, special hiring authority, and outreach

501.

Centralization of certain Committee functions

Section 721 of the Defense Production Act of 1950 (50 U.S.C. 4565) is amended by adding at the end the following:

(o)

Centralization of certain committee functions

(1)

In general

The chairperson, in consultation with the Committee, may centralize certain functions of the Committee within the Department of the Treasury for the purpose of enhancing interagency coordination and collaboration in carrying out the functions of the Committee under this section.

(2)

Rule of construction

Nothing in this subsection shall be construed as limiting the authority of any department or agency represented on the Committee to represent its own interests before the Committee.

.

502.

CFIUS resource needs

(a)

Unified budget request

Section 721 of the Defense Production Act of 1950 (50 U.S.C. 4565), as amended by section 501, is further amended by adding at the end the following:

(p)

Unified budget request

(1)

In general

The President may include, in the budget of the Department of the Treasury for a fiscal year (as submitted to Congress with the budget of the President under section 1105(a) of title 31, United States Code), a unified request for funding of all operations under this section conducted by all of the departments and agencies represented on the Committee.

(2)

Form of budget request

A unified request under paragraph (1) shall be detailed and include the amounts and staffing levels requested for each department or agency represented on the Committee to carry out the functions of that department or agency under this section.

.

(b)

Annual spending plan

Not later than 90 days following the date of enactment of this Act, and annually thereafter, the chairperson of the Committee on Foreign Investment in the United States shall transmit to the Committees on Appropriations and Financial Services of the House of Representatives and the Committees on Appropriations and Banking, Housing, and Urban Affairs of the Senate a detailed spending plan to expeditiously meet the requirements of subsections (b), (l), and (m) of section 721 of the Defense Production Act of 1950, as amended by this Act, including estimated expenditures and staffing levels required by operations of the Committee for not less than the following fiscal year at each of the Committee’s member agencies.

(c)

Waiver

The chairperson may waive the reporting requirement under subsection (b) with respect to a fiscal year for which a unified budget request described under section 721(p) of the Defense Production Act of 1950 has been submitted.

(d)

Special hiring authority

Section 721 of the Defense Production Act of 1950 (50 U.S.C. 4565), as amended by subsection (a), is further amended by adding at the end the following:

(q)

Special hiring authority

The heads of the departments and agencies represented on the Committee may appoint, without regard to the provisions of sections 3309 through 3318 of title 5, United States Code, candidates directly to positions in the competitive service (as defined in section 2102 of that title) in their respective departments and agencies to administer this section.

.

(e)

Testimony required

Section 721 of the Defense Production Act of 1950 (50 U.S.C. 4565), as amended by subsection (d), is further amended by adding at the end the following:

(r)

Testimony

(1)

In general

After submitting the unified budget request described under subsection (p), or the spending plan described under section 502 of the Foreign Investment Risk Review Modernization Act of 2018, as the case may be, but not later than March 31 of each year, the chairperson, or the chairperson’s designee, shall appear before the Committee on Financial Services of the House of Representatives and present testimony on—

(A)

anticipated resources necessary for operations of the Committee in the following fiscal year at each of the Committee’s member agencies;

(B)

the adequacy of appropriations for the Committee in the current and the previous fiscal year to—

(i)

ensure that thorough reviews and investigations are completed as expeditiously as possible;

(ii)

monitor and enforce mitigation agreements; and

(iii)

identify covered transactions for which a notice under clause (i) of subsection (b)(1)(C) or a declaration under clause (v) of subsection (b)(1)(C) was not submitted to the Committee; and

(C)

management efforts to strengthen the ability of the Committee to meet the requirements of this section.

(2)

Sunset

This subsection shall have no force or effect on the date that is five years following the date of enactment of the Foreign Investment Risk Review Modernization Act of 2018.

.

503.

CFIUS outreach

Not later than 180 days after the date of enactment of this Act, and every year thereafter for five years, the chairperson of the Committee on Foreign Investment in the United States (CFIUS), or the chairperson’s designee, shall brief the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate on activities of CFIUS undertaken in order to—

(1)

educate the business community, with a particular focus on the technology sector and other sectors of importance to national security, on the goals and operations of CFIUS; and

(2)

disseminate to the governments of United States allies best practices of CFIUS that—

(A)

strengthen national security reviews of relevant investment transactions;

(B)

expedite such reviews when appropriate; and

(C)

promote openness to foreign investment, consistent with national security considerations.

VI

Miscellaneous FIRRMA provisions

601.

Conforming amendment

Section 721(d)(4)(A) of the Defense Production Act of 1950 (50 U.S.C. 4565(d)(4)(A)) is amended by striking the foreign interest exercising control and inserting a foreign person that would acquire an interest in a United States business or its assets as a result of the covered transaction.

602.

Regulatory certainty for United States businesses

Section 721 of the Defense Production Act of 1950 (50 U.S.C. 4565), as amended by section 502, is further amended by adding at the end the following:

(s)

Regulatory certainty for United States businesses

With respect to mitigating a national security risk that results from a foreign person’s investment in, or joint venture with, a United States business, a member agency of the Committee may not prescribe or implement regulations to require divestment by, or of, the United States business, unless—

(1)

the regulations are prescribed under this section or pursuant to authorities of the President under the International Emergency Economic Powers Act; or

(2)

the President reports to Congress in writing that the regulations—

(A)

are, wherever applicable, consistent with regulations prescribed under this section, including any such regulations pertaining to—

(i)

foreign control or influence over a United States business;

(ii)

the identification of emerging, foundational, or other critical technologies; and

(iii)

confidentiality requirements with respect to information and documentary material regarding United States businesses; and

(B)

in the case of regulations prescribed or finalized following the effective date of this subsection, were prescribed in consultation with the chairperson of the Committee and with the head of any member agency determined by the President to be affected by the regulations.

.

VII

Common Sense Credit Union Capital Relief

701.

Delay in effective date

Notwithstanding any effective date set forth in the rule issued by the National Credit Union Administration titled Risk-Based Capital (published at 80 Fed. Reg. 66626 (October 29, 2015)), such final rule shall take effect on January 1, 2021.

VIII

Export Control Reform

801.

Short title

This title may be cited as the Export Control Reform Act of 2018.

802.

Definitions

In this title:

(1)

Controlled

The term controlled means the export, reexport, or transfer of an item subject to the jurisdiction of the United States under subtitle A.

(2)

Dual-use

The term dual-use, with respect to an item, means the item has civilian applications and military, terrorism, weapons of mass destruction, or law-enforcement-related applications.

(3)

Export

The term export, with respect to an item subject to controls under subtitle A, includes—

(A)

the shipment or transmission of the item out of the United States, including the sending or taking of the item out of the United States, in any manner; and

(B)

the release or transfer of technology or source code relating to the item to a foreign person in the United States.

(4)

Export administration regulations

The term Export Administration Regulations means—

(A)

the Export Administration Regulations as promulgated, maintained, and amended under the authority of the International Emergency Economic Powers Act and codified, as of the date of the enactment of this Act, in subchapter C of chapter VII of title 15, Code of Federal Regulations; or

(B)

regulations that are promulgated, maintained, and amended under the authority of subtitle A on or after the date of the enactment of this Act.

(5)

Foreign person

The term foreign person means a person that is not a United States person.

(6)

Item

The term item means a commodity, software, or technology.

(7)

Person

The term person means—

(A)

a natural person;

(B)

a corporation, business association, partnership, society, trust, financial institution, insurer, underwriter, guarantor, and any other business organization, any other nongovernmental entity, organization, or group, or any government or agency thereof; and

(C)

any successor to any entity described in subparagraph (B).

(8)

Reexport

The term reexport, with respect to an item subject to controls under subtitle A, includes—

(A)

the shipment or transmission of the item from a foreign country to another foreign country, including the sending or taking of the item from the foreign country to the other foreign country, in any manner; and

(B)

the release or transfer of technology or source code relating to the item to a foreign person outside the United States.

(9)

Secretary

Except as otherwise provided, the term Secretary means the Secretary of Commerce.

(10)

Technology

The term technology includes foundational information and information and know-how necessary for the development (at all stages prior to serial production), production, use, operation, installation, maintenance, repair, overhaul or refurbishing of an item.

(11)

Transfer

The term transfer, with respect to an item subject to controls under title I, means a change in the end-use or end user of the item within the same foreign country.

(12)

United States

The term United States means the several States, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, American Samoa, Guam, the United States Virgin Islands, and any other territory or possession of the United States.

(13)

United States person

The term United States person means—

(A)

for purposes of subtitles A and C—

(i)

any individual who is a citizen or national of the United States or who is an individual described in subparagraph (B) of section 274B(a)(3) of the Immigration and Nationality Act (8 U.S.C. 1324b(a)(3));

(ii)

a corporation or other legal entity which is organized under the laws of the United States, any State or territory thereof, or the District of Columbia; and

(iii)

any person in the United States; and

(B)

for purposes of subtitle B, any United States resident or national (other than an individual resident outside the United States and employed by other than a United States person), any domestic concern (including any permanent domestic establishment of any foreign concern) and any foreign subsidiary or affiliate (including any permanent foreign establishment) of any domestic concern which is controlled in fact by such domestic concern, as determined under regulations by the Secretary.

(14)

Weapons of mass destruction

The term weapons of mass destruction means nuclear, radiological, chemical, and biological weapons and delivery systems for such weapons.

A

Authority and administration of controls

811.

Short title

This subtitle may be cited as the Export Controls Act of 2018.

812.

Statement of policy

The following is the policy of the United States:

(1)

The national security and foreign policy of the United States require that the export, reexport, and transfer of items, and specific activities of United States persons, wherever located, be controlled for the following purposes:

(A)

To control the release of items for use in—

(i)

the proliferation of weapons of mass destruction or of conventional weapons;

(ii)

the acquisition of destabilizing numbers or types of conventional weapons;

(iii)

acts of terrorism;

(iv)

military programs that could pose a threat to the security of the United States or its allies; or

(v)

activities undertaken specifically to cause significant interference with or disruption of critical infrastructure.

(B)

To preserve the qualitative military superiority of the United States.

(C)

To strengthen the United States industrial base.

(D)

To carry out the foreign policy of the United States, including the protection of human rights and the promotion of democracy.

(E)

To carry out obligations and commitments under international agreements and arrangements, including multilateral export control regimes.

(F)

To facilitate military interoperability between the United States and its North Atlantic Treaty Organization (NATO) and other close allies.

(G)

To ensure national security controls are tailored to focus on those core technologies and other items that are capable of being used to pose a serious national security threat to the United States.

(2)

The national security of the United States requires that the United States maintain its leadership in the science, technology, engineering, and manufacturing sectors, including foundational technology that is essential to innovation. Such leadership requires that United States persons are competitive in global markets. The impact of the implementation of this subtitle on such leadership and competitiveness must be evaluated on an ongoing basis and applied in imposing controls under sections 813 and 814 to avoid negatively affecting such leadership.

(3)

The national security and foreign policy of the United States require that the United States participate in multilateral organizations and agreements regarding export controls on items that are consistent with the policy of the United States, and take all the necessary steps to secure the adoption and consistent enforcement, by the governments of such countries, of export controls on items that are consistent with such policy.

(4)

Export controls should be fully coordinated with the multilateral export control regimes. Export controls that are multilateral are most effective, and should be tailored to focus on those core technologies and other items that are capable of being used to pose a serious national security threat to the United States and its allies.

(5)

Export controls applied unilaterally to items widely available from foreign sources generally are less effective in preventing end-users from acquiring those items.

(6)

The effective administration of export controls requires a clear understanding both inside and outside the United States Government of which technologies and other items are controlled and an efficient process should be created to update the controls, such as by removing and adding technologies and other items.

(7)

The export control system must ensure that it is transparent, predictable, and timely, has the flexibility to be adapted to address new threats in the future, and allows seamless access to and sharing of export control information among all relevant United States national security and foreign policy agencies.

(8)

Implementation and enforcement of United States export controls require robust capabilities in monitoring, intelligence, and investigation, appropriate penalties for violations, and the ability to swiftly interdict unapproved transfers.

(9)

Export controls should be balanced with United States counterterrorism, information security, and cyber-security policies to ensure the ability to export, reexport, and transfer technology and other items in support of counterterrorism, critical infrastructure, and other homeland security priorities, while effectively preventing malicious cyber terrorists from obtaining items that threaten the United States and its interests, including the protection of and safety of United States citizens abroad.

(10)

Export controls complement and are a critical element of the national security policies underlying the laws and regulations governing foreign direct investment in the United States, including controlling the transfer of critical technologies to certain foreign persons. Thus, the President, in close coordination with the Department of Commerce, the Department of Defense, the Department of State, the Department of Energy, and other agencies responsible for export controls, should have a regular and robust process to identify the emerging and other types of critical technologies of concern and regulate their release to foreign persons as warranted regardless of the nature of the underlying transaction. Such identification efforts should draw upon the resources and expertise of all relevant parts of the United States Government, industry, and academia. These efforts should be in addition to traditional efforts to modernize and update the lists of controlled items under the multilateral export control regimes.

(11)

The authority under this subtitle may be exercised only in furtherance of all of the objectives set forth in paragraphs (1) through (10).

813.

Authority of the President

(a)

Authority

In order to carry out the policy set forth in paragraphs (1) through (10) of section 812, the President shall control—

(1)

the export, reexport, and transfer of items subject to the jurisdiction of the United States, whether by United States persons or by foreign persons; and

(2)

the activities of United States persons, wherever located, relating to specific—

(A)

nuclear explosive devices;

(B)

missiles;

(C)

chemical or biological weapons;

(D)

whole plants for chemical weapons precursors;

(E)

foreign maritime nuclear projects; and

(F)

foreign military intelligence services.

(b)

Requirements

In exercising authority under this subtitle, the President shall impose controls to achieve the following objectives:

(1)

To regulate the export, reexport, and transfer of items described in subsection (a)(1) of United States persons or foreign persons.

(2)

To regulate the activities described in subsection (a)(2) of United States persons, wherever located.

(3)

To secure the cooperation of other governments and multilateral organizations to impose control systems that are consistent, to the extent possible, with the controls imposed under subsection (a).

(4)

To maintain the leadership of the United States in science, engineering, technology research and development, manufacturing, and foundational technology that is essential to innovation.

(5)

To protect United States technological advances by prohibiting unauthorized technology transfers to foreign persons in the United States or outside the United States, particularly with respect to countries that may pose a significant threat to the national security of the United States.

(6)

To enhance the viability of commercial firms, academic institutions, and research establishments, and maintain the skilled workforce of such firms, institutions, and establishments, that are necessary to preserving the leadership of the United States described in paragraph (4).

(7)

To strengthen the United States industrial base, both with respect to current and future defense requirements.

(8)

To enforce the controls through means such as regulations, requirements for compliance, lists of controlled items, lists of foreign persons who threaten the national security or foreign policy of the United States, and guidance in a form that facilitates compliance by United States persons and foreign persons, in particular academic institutions, scientific and research establishments, and small- and medium-sized businesses.

(c)

Application of controls

The President shall impose controls over the export, reexport, or transfer of items for purposes of the objectives described in subsections (b)(1) or (b)(2) without regard to the nature of the underlying transaction or any circumstances pertaining to the activity, including whether such export, reexport, or transfer occurs pursuant to a purchase order or other contract requirement, voluntary decision, inter-company arrangement, marketing effort, or during a joint venture, joint development agreement, or similar collaborative agreement.

814.

Additional authorities

(a)

In general

In carrying out this subtitle, the President shall—

(1)

establish and maintain lists published by the Secretary of items that are controlled under this subtitle;

(2)

establish and maintain lists published by the Secretary of foreign persons and end-uses that are determined to be a threat to the national security and foreign policy of the United States pursuant to the policy set forth in section 812(1)(A);

(3)

prohibit unauthorized exports, reexports, and transfers of controlled items, including to foreign persons in the United States or outside the United States;

(4)

restrict exports, reexports, and transfers of any controlled items to any foreign person or end-use listed under paragraph (2);

(5)

require licenses or other authorizations, as appropriate, for exports, reexports, and transfers of controlled items, including imposing conditions or restrictions on United States persons and foreign persons with respect to such licenses or other authorizations;

(6)

establish a process by which a license applicant may request an assessment to determine whether a foreign item is comparable in quality to an item controlled under this subtitle, and is available in sufficient quantities to render the United States export control of that item or the denial of a license ineffective, including a mechanism to address that disparity;

(7)

require measures for compliance with the export controls established under this subtitle;

(8)

require and obtain such information from United States persons and foreign persons as is necessary to carry out this subtitle;

(9)

require, as appropriate, advance notice before an item is exported, reexported, or transferred, as an alternative to requiring a license;

(10)

require, to the extent feasible, identification of items subject to controls under this subtitle in order to facilitate the enforcement of such controls;

(11)

inspect, search, detain, seize, or impose temporary denial orders with respect to items, in any form, that are subject to controls under this subtitle, or conveyances on which it is believed that there are items that have been, are being, or are about to be exported, reexported, or transferred in violation of this subtitle;

(12)

monitor shipments, or other means of transfer;

(13)

keep the public fully apprised of changes in policy, regulations, and procedures established under this subtitle;

(14)

appoint technical advisory committees in accordance with the Federal Advisory Committee Act;

(15)

create, as warranted, exceptions to licensing requirements in order to further the objectives of this subtitle;

(16)

establish and maintain processes to inform persons, either individually by specific notice or through amendment to any regulation or order issued under this subtitle, that a license from the Bureau of Industry and Security of the Department of Commerce is required to export; and

(17)

undertake any other action as is necessary to carry out this subtitle that is not otherwise prohibited by law.

(b)

Relationship to IEEPA

The authority under this subtitle may not be used to regulate or prohibit under this subtitle the export, reexport, or transfer of any item that may not be regulated or prohibited under section 203(b) of the International Emergency Economic Powers Act (50 U.S.C. 1702(b)), except to the extent the President has made a determination necessary to impose controls under subparagraph (A), (B), or (C) of paragraph (2) of such section.

(c)

Countries supporting international terrorism

(1)

License requirement

(A)

In general

A license shall be required for the export, reexport, or transfer of items to a country if the Secretary of State has made the following determinations:

(i)

The government of such country has repeatedly provided support for acts of international terrorism.

(ii)

The export, reexport, or transfer of such items could make a significant contribution to the military potential of such country, including its military logistics capability, or could enhance the ability of such country to support acts of international terrorism.

(B)

Determination under other provisions of law

A determination of the Secretary of State under section 620A of the Foreign Assistance Act of 1961 (22 U.S.C. 2371), section 40 of the Arms Export Control Act (22 U.S.C. 2780), or any other provision of law that the government of a country described in subparagraph (A) has repeatedly provided support for acts of international terrorism shall be deemed to be a determination with respect to such government for purposes of clause (i) of subparagraph (A).

(2)

Notification to Congress

The Secretary of State or the Secretary of Commerce shall notify the Committee on Foreign Affairs of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs and the Committee on Foreign Relations of the Senate at least 30 days before issuing any license required by paragraph (1).

(3)

Publication in Federal Register

Each determination of the Secretary of State under paragraph (1)(A) shall be published in the Federal Register, except that the Secretary of State may exclude confidential information and trade secrets contained in such determination.

(4)

Rescission of determination

A determination of the Secretary of State under paragraph (1)(A) may not be rescinded unless the President submits to the Speaker of the House of Representatives, the chairman of the Committee on Foreign Affairs, and the chairman of the Committee on Banking, Housing, and Urban Affairs and the chairman of the Committee on Foreign Relations of the Senate—

(A)

before the proposed rescission would take effect, a report certifying that—

(i)

there has been a fundamental change in the leadership and policies of the government of the country concerned;

(ii)

that government is not supporting acts of international terrorism; and

(iii)

that government has provided assurances that it will not support acts of international terrorism in the future; or

(B)

at least 90 days before the proposed rescission would take effect, a report justifying the rescission and certifying that—

(i)

the government concerned has not provided any support for acts international terrorism during the preceding 24-month period; and

(ii)

the government concerned has provided assurances that it will not support acts of international terrorism in the future.

(5)

Disapproval of rescission

No rescission under paragraph (4)(B) of a determination under paragraph (1)(A) with respect to the government of a country may be made if Congress, within 90 days after receipt of a report under paragraph (4)(B), enacts a joint resolution described in subsection (f)(2) of section 40 of the Arms Export Control Act with respect to a rescission under subsection (f)(1) of such section with respect to the government of such country.

(6)

Notification and briefing

Not later than—

(A)

ten days after initiating a review of the activities of the government of the country concerned within the 24-month period referred to in paragraph (4)(B)(i), the Secretary of State shall notify the Committee on Foreign Affairs of the House of Representatives and the Committee on Foreign Relations of the Senate of such initiation; and

(B)

20 days after the notification described in paragraph (1), the Secretary of State shall brief the congressional committees described in paragraph (1) on the status of such review.

(7)

Contents of notification of license

The Secretary of State shall include in the notification required by paragraph (2)—

(A)

a detailed description of the items to be offered, including a brief description of the capabilities of any item for which a license to export, reexport, or transfer the items is sought;

(B)

the reasons why the foreign country, person, or entity to which the export, reexport, or transfer is proposed to be made has requested the items under the export, reexport, or transfer, and a description of the manner in which such country, person, or entity intends to use such items;

(C)

the reasons why the proposed export, reexport, or transfer is in the national interest of the United States;

(D)

an analysis of the impact of the proposed export, reexport, or transfer on the military capabilities of the foreign country, person, or entity to which such transfer would be made;

(E)

an analysis of the manner in which the proposed export, reexport, or transfer would affect the relative military strengths of countries in the region to which the items that are the subject of such export, reexport, or transfer would be delivered and whether other countries in the region have comparable kinds and amounts of items; and

(F)

an analysis of the impact of the proposed export, reexport, or transfer on the relations of the United States with the countries in the region to which the items that are the subject of such export, reexport, or transfer would be delivered.

(d)

Enhanced controls

(1)

In general

In furtherance of section 813(a), the President shall, except to the extent authorized by a statute or regulation administered by a Federal department or agency other than the Department of Commerce, require a United States person, wherever located, to apply for and receive a license from the Department of Commerce for—

(A)

the export, reexport, or transfer of items described in paragraph (2), including items that are not subject to control under this subtitle; and

(B)

other activities that may support the design, development, production, use, operation, installation, maintenance, repair, overhaul, or refurbishing of, or for the performance of services relating to, any such items.

(2)

Items described

The items described in this paragraph include—

(A)

nuclear explosive devices;

(B)

missiles;

(C)

chemical or biological weapons;

(D)

whole plants for chemical weapons precursors; and

(E)

foreign maritime nuclear projects that would pose a risk to the national security or foreign policy of the United States.

(e)

Additional prohibitions

The Secretary may inform United States persons, either individually by specific notice or through amendment to any regulation or order issued under this subtitle, that a license from the Bureau of Industry and Security of the Department of Commerce is required to engage in any activity if the activity involves the types of movement, service, or support described in subsection (d). The absence of any such notification does not excuse the United States person from compliance with the license requirements of subsection (d), or any regulation or order issued under this subtitle.

(f)

License review standards

The Secretary shall deny an application to engage in any activity described in subsection (d) if the activity would make a material contribution to any of the items described in subsection (d)(2).

815.

Administration of export controls

(a)

In general

The President shall delegate to the Secretary of Commerce, the Secretary of Defense, the Secretary of State, the Secretary of Energy, and, as appropriate, the Director of National Intelligence and the heads of other appropriate Federal departments and agencies, the authority to carry out the purposes set forth in subsection (b).

(b)

Purposes

(1)

In general

The purpose of the delegations of authority pursuant to subsection (a) are—

(A)

to advise the President with respect to—

(i)

identifying specific threats to the national security and foreign policy that the authority of this subtitle may be used to address; and

(ii)

exercising the authority under this subtitle to implement policies, regulations, procedures, and actions that are necessary to effectively counteract those threats;

(B)

to review and approve—

(i)

criteria for including items on, and removing such an item from, a list of controlled items established under this subtitle;

(ii)

an interagency procedure for compiling and amending any list described in clause (i);

(iii)

criteria for including a person on a list of persons to whom exports, reexports, and transfers of items are prohibited or restricted under this subtitle;

(iv)

standards for compliance by persons subject to controls under this subtitle; and

(v)

policies and procedures for the end-use monitoring of exports, reexports, and transfers of items controlled under this subtitle;

(C)

to obtain independent evaluations, including from Inspectors General of the relevant departments or agencies, on a periodic basis on the effectiveness of the implementation of this subtitle in carrying out the policy set forth in section 812; and

(D)

to benefit from the inherent equities, experience, and capabilities of the Federal officials described in subsection (a), including—

(i)

the views of the Department of Defense with respect to the national security implications of a particular control or decision;

(ii)

the views of the Department of State with respect to the foreign policy implications of a particular control or decision;

(iii)

the views of the Department of Energy with respect to the implications for nuclear proliferation of a particular control or decision; and

(iv)

the views of the Department of Commerce with respect to the administration of an efficient, coherent, reliable, enforceable, and predictable export control system, and the resolution of competing views or policy objectives described in section 812.

(2)

Authority to seek information

The Federal officials described in subsection (a) may, in carrying out the purposes set forth in paragraph (1), seek information and advice from experts who are not officers or employees of the Federal Government.

(3)

Transmittal and implementation of evaluations

The results of the independent evaluations conducted pursuant to paragraph (1)(C) shall be transmitted to the President and the Congress, in classified form if necessary. Subject to the delegation of authority by the President, the Federal officials described in subsection (a) shall determine, direct, and ensure that improvements recommended in the evaluations are implemented.

(c)

Sense of Congress

It is the sense of Congress that the administration of export controls under this subtitle should be consistent with the procedures relating to export license applications described in Executive Order 12981 (1995).

816.

Control lists

The President shall, pursuant to the delegation of authority in section 815, ensure that—

(1)

a process is established for regular interagency review of each list established under section 814(a)(1), that pursuant to such review the Secretary regularly updates such lists to ensure that new items (including emerging critical technologies) are appropriately controlled, and that the level of control of items on the lists are adjusted as conditions change;

(2)

information and expertise are obtained from officers and employees from relevant Federal departments, agencies, and offices and persons outside the Federal Government who have technical expertise, with respect to the characteristics of the items considered for each list established under section 814(a)(1) and the effect of controlling the items on addressing the policy set forth in section 812;

(3)

each list established under section 814(a)(1) appropriately identifies each entry that has been included by virtue of the participation of the United States in a multilateral regime, organization, or group the purpose of which is consistent with and supports the policy of the United States under this subtitle relating to the control of exports, reexports, and transfers of items; and

(4)

each list established under section 814(a)(1) is published by the Secretary in a form that facilitates compliance with it and related requirements, particularly by small- and medium-sized businesses, and academic institutions.

817.

Licensing

(a)

In general

The President shall, pursuant to the delegation of authority in section 815, establish a procedure for the Department of Commerce to license or otherwise authorize the export, reexport, and transfer of items controlled under this subtitle in order to carry out the policy set forth in section 812 and the requirements set forth in section 813(b). The procedure shall ensure that—

(1)

license applications, other requests for authorization, and related dispute resolution procedures are considered and decisions made with the participation of appropriate departments, agencies, and offices that have delegated functions under this subtitle; and

(2)

licensing decisions are made in an expeditious manner, with transparency to applicants on the status of license and other authorization processing and the reason for denying any license or request for authorization.

(b)

Sense of Congress

It is the sense of Congress that the President should make best efforts to ensure that an accurate, consistent, and timely evaluation and processing of licenses or other requests for authorization to export, reexport, or transfer items controlled under this subtitle is accomplished within 30 days from the date of such license request.

(c)

Fees

No fee may be charged in connection with the submission, processing, or consideration of any application for a license or other authorization or other request made in connection with any regulation in effect under the authority of this subtitle.

818.

Compliance assistance

(a)

System for seeking assistance

The President may authorize the Secretary to establish a system to provide United States persons with assistance in complying with this subtitle, which may include a mechanism for providing information, in classified form as appropriate, who are potential customers, suppliers, or business partners with respect to items controlled under this subtitle, in order to further ensure the prevention of the export, reexport, or transfer of items that may pose a threat to the national security or foreign policy of the United States.

(b)

Security clearances

In order to carry out subsection (a), the President may issue appropriate security clearances to persons described in that subsection who are responsible for complying with this subtitle.

(c)

Assistance for certain businesses

(1)

In general

Not later than 120 days after the date of the enactment of this Act, the President shall develop and submit to Congress a plan to assist small- and medium-sized United States in export licensing and other processes under this subtitle.

(2)

Contents

The plan shall include, among other things, arrangements for the Department of Commerce to provide counseling to businesses described in paragraph (1) on filing applications and identifying items controlled under this subtitle, as well as proposals for seminars and conferences to educate such businesses on export controls, licensing procedures, and related obligations.

819.

Requirements to identify and control emerging, foundational, and other critical technologies in export control regulations

(a)

In general

The President shall establish and, in coordination with the Secretary, the Secretary of Defense, the Secretary of Energy, the Secretary of State, and the heads of other departments as appropriate, lead a regular, ongoing interagency process to identify the following:

(1)

Emerging, foundational, or other critical technologies that are essential to the national security of the United States and that are not—

(A)

identified in any list of items controlled for export under United States law or regulations; or

(B)

hereafter separately identified in any law or regulation under the authority of a department or agency responsible for administering United States export controls.

(2)

Other technologies that are not identified in any list of items controlled for export under United States law or regulations that are essential to the national security of the United States.

(3)

Subject to subsections (c) and (d), the President shall require the relevant export control authority to publish proposed regulations for public comment, including, as appropriate, interim final rules, that would control such emerging, foundational, or other critical technologies identified pursuant to this subsection and control the release of each such technology to destinations, end uses, or end users as determined by the President.

(b)

Requirements

The interagency process required under subsection (a) shall—

(1)

be informed by multiple sources of information, including industry, academia, other open source and classified information and transactions reviewed by the Committee on Foreign Investment in the United States;

(2)

take into account the foreign development or availability of such emerging, foundational, and other critical technologies and the impact the controls established in subsection (c) may have on the development of the technology in the United States; and

(3)

the Secretary, the Secretary of Defense, the Secretary of Energy, and the Secretary of State, and the heads of other departments as appropriate, shall consider relevant information provided by the Director of National Intelligence.

(c)

Commerce controls

(1)

In general

The Secretary is authorized to establish controls, as appropriate, on technologies identified through the interagency process required under subsection (a) and subject to the Export Administration Regulations, including by publishing additional regulations.

(2)

Levels of control

(A)

In general

The Secretary, in coordination with the Secretary of Defense, the Secretary of State, and the heads of other departments as appropriate, is authorized to develop and apply levels of control, including the requirements for a license or other authorization, to export, reexport, or transfer such technologies.

(B)

Requirements

In developing and applying the levels of control for such technologies, the Secretary—

(i)

shall take into account—

(I)

whether a country is subject to a United States arms embargo or is otherwise subject to United States sanctions;

(II)

potential end users and end uses; and

(III)

the threat to the national security and foreign policy of the United States;

(ii)

shall, at a minimum, require a license to export, reexport, or transfer such technologies to a country that is subject to a comprehensive United States arms embargo; and

(iii)

may provide for appropriate license exceptions for the export, reexport, or transfer of such technologies.

(C)

License applications submitted pursuant to subparagraph (B)(ii)

For license applications submitted pursuant to subparagraph (B)(ii), the Secretary may, with respect to any joint venture, joint development agreement, or similar collaborative arrangement, require the applicant to identify, in addition to the foreign participant directly involved in the collaborative arrangement, any foreign person with significant ownership interest in the direct foreign participant.

(3)

Review of license applications

(A)

In general

The procedures set forth in Executive Order 12981 (1995) (as amended) or any successor Executive order, shall apply to the review of applications for licenses to export, reexport, or transfer technologies identified through the interagency process required under subsection (a) submitted to the Department of Commerce pursuant to paragraph (2).

(B)

Other information

In addition to the procedures described in subparagraph (A), the review of applications for such licenses shall take into account information provided by the Director of National Intelligence regarding any threat to the national security of the United States posed by the proposed export, reexport, or transfer of such technologies.

(d)

Multilateral controls

(1)

In general

The Secretary of State, in consultation with the Secretary and the Secretary of Defense and heads of other departments as appropriate, shall propose to the relevant multilateral export control regimes in the following year that technologies identified through the interagency process required under subsection (a) be added to the list of technologies controlled by such regimes.

(2)

Review of continued unilateral export controls

The Secretary, with respect to those items on the Commerce Control List maintained under part 774 of title 15, Code of Federal Regulations, and in consultation with the Secretary of Defense and the Secretary of State, and the Secretary of State, with respect to those items on the United States Munitions List and in consultation with the Secretary of Defense and the heads of other departments as appropriate, shall determine whether national security concerns warrant continued unilateral export controls over technologies proposed for multilateral control under paragraph (1) if the relevant multilateral export control regime does not agree to list such technologies on its control list within three years of a proposal by the United States.

(e)

Report

The Secretary, the Secretary of State, and the Secretary of Energy, as appropriate, shall submit to the Committee on Foreign Investment in the United States on a semiannual basis a report on updates of any key actions taken pursuant to this section.

(f)

Rule of construction

Nothing in this section should be construed to alter or limit—

(1)

the authority of the President and the Secretary of State to designate those items that are considered to be defense articles or defense services for purposes of the Arms Export Control Act (22 U.S.C. 2751 et seq.) or any other relevant law, and to regulate such items; or

(2)

the authority of the President under the Atomic Energy Act of 1954, the Nuclear Non-Proliferation Act of 1978, the Energy Reorganization Act of 1974, this title, or any other relevant law.

(g)

Sense of Congress

It is the sense of the Congress that the President should request in the annual budget of the President submitted under section 1105(a) of title 31, United States Code, sufficient resources to enable the relevant departments and agencies to effectively implement this section.

820.

Review relating to countries subject to comprehensive United States arms embargo

Not later than 180 days after the date of the enactment of this Act, the Secretary, the Secretary of Defense, the Secretary of Energy, the Secretary of State, and the heads of other departments as appropriate, shall conduct a review of—

(1)

section 744.21 of title 15, Code of Federal Regulations, including to assess whether the current and anticipated risks of direct or indirect diversion, such as from policies and practices that effectively obscure distinctions between civil and military end-users and end-uses, require that the scope of control under such section should be expanded to apply to exports, reexports, or transfers for military end uses and military end users in countries that are subject to a comprehensive United States arms embargo; and

(2)

entries on the Commerce Control List maintained under part 774 of title 15, Code of Federal Regulations, that do not impose license requirements for exports, reexports, or transfers to countries subject to a comprehensive United States arms embargo.

821.

Penalties

(a)

Unlawful acts

(1)

In general

It shall be unlawful for a person to violate, attempt to violate, conspire to violate, or cause a violation of this subtitle or of any regulation, order, license, or other authorization issued under this subtitle, including any of the unlawful acts described in paragraph (2).

(2)

Specific unlawful acts

The unlawful acts described in this paragraph are the following:

(A)

No person may engage in any conduct prohibited by or contrary to, or refrain from engaging in any conduct required by this subtitle, the Export Administration Regulations, or any order, license or authorization issued thereunder.

(B)

No person may cause or aid, abet, counsel, command, induce, procure, permit, or approve the doing of any act prohibited, or the omission of any act required by this subtitle, the Export Administration Regulations, or any order, license or authorization issued thereunder.

(C)

No person may solicit or attempt a violation of this subtitle, the Export Administration Regulations, or any order, license or authorization issued thereunder.

(D)

No person may conspire or act in concert with one or more other persons in any manner or for any purpose to bring about or to do any act that constitutes a violation of this subtitle, the Export Administration Regulations, or any order, license or authorization issued thereunder.

(E)

No person may order, buy, remove, conceal, store, use, sell, loan, dispose of, transfer, transport, finance, forward, or otherwise service, in whole or in part, or conduct negotiations to facilitate such activities for, any item exported or to be exported from the United States, or that is otherwise subject to the Export Administration Regulations, with knowledge that a violation of this subtitle, the Export Administration Regulations, or any order, license or authorization issued thereunder, has occurred, is about to occur, or is intended to occur in connection with the item unless valid authorization is obtained therefor.

(F)

No person may make any false or misleading representation, statement, or certification, or falsify or conceal any material fact, either directly to the Department of Commerce, or an official of any other United States agency, or indirectly through any other person—

(i)

in the course of an investigation or other action subject to the Export Administration Regulations;

(ii)

in connection with the preparation, submission, issuance, use, or maintenance of any export control document or any report filed or required to be filed pursuant to the Export Administration Regulations; or

(iii)

for the purpose of or in connection with effecting any export, reexport, or transfer of an item subject to the Export Administration Regulations or a service or other activity of a United States person described in section 814.

(G)

No person may engage in any transaction or take any other action with intent to evade the provisions of this subtitle, the Export Administration Regulations, or any order, license, or authorization issued thereunder.

(H)

No person may fail or refuse to comply with any reporting or recordkeeping requirements of the Export Administration Regulations or of any order, license, or authorization issued thereunder.

(I)

Except as specifically authorized in the Export Administration Regulations or in writing by the Department of Commerce, no person may alter any license, authorization, export control document, or order issued under the Export Administration Regulations.

(J)

No person may take any action that is prohibited by a denial order issued by the Department of Commerce to prevent imminent violations of this subtitle, the Export Administration Regulations, or any order, license or authorization issued thereunder.

(3)

Additional requirements

For purposes of subparagraph (G), any representation, statement, or certification made by any person shall be deemed to be continuing in effect. Each person who has made a representation, statement, or certification to the Department of Commerce relating to any order, license, or other authorization issued under this subtitle shall notify the Department of Commerce, in writing, of any change of any material fact or intention from that previously represented, stated, or certified, immediately upon receipt of any information that would lead a reasonably prudent person to know that a change of material fact or intention had occurred or may occur in the future.

(b)

Criminal penalty

A person who willfully commits, willfully attempts to commit, or willfully conspires to commit, or aids and abets in the commission of, an unlawful act described in subsection (a)—

(1)

shall be fined not more than $1,000,000; and

(2)

in the case of the individual, shall be imprisoned for not more than 20 years, or both.

(c)

Civil penalties

(1)

Authority

The President may impose the following civil penalties on a person for each violation by that person of this subtitle or any regulation, order, or license issued under this subtitle, for each violation:

(A)

A fine of not more than $300,000 or an amount that is twice the value of the transaction that is the basis of the violation with respect to which the penalty is imposed, whichever is greater.

(B)

Revocation of a license issued under this subtitle to the person.

(C)

A prohibition on the person’s ability to export, reexport, or transfer any items, whether or not subject to controls under this subtitle.

(2)

Procedures

Any civil penalty under this subsection may be imposed only after notice and opportunity for an agency hearing on the record in accordance with sections 554 through 557 of title 5, United States Code.

(3)

Standards for levels of civil penalty

The Secretary may by regulation provide standards for establishing levels of civil penalty under this subsection based upon factors such as the seriousness of the violation, the culpability of the violator, and such mitigating factors as the violator’s record of cooperation with the Government in disclosing the violation.

(d)

Criminal forfeiture of property interest and proceeds

(1)

Forfeiture

Any person who is convicted under subsection (b) of a violation of a control imposed under section 813 (or any regulation, order, or license issued with respect to such control) shall, in addition to any other penalty, forfeit to the United States—

(A)

any of that person’s interest in, security of, claim against, or property or contractual rights of any kind in the tangible items that were the subject of the violation;

(B)

any of that person’s interest in, security of, claim against, or property or contractual rights of any kind in tangible property that was used in the violation; and

(C)

any of that person’s property constituting, or derived from, any proceeds obtained directly or indirectly as a result of the violation.

(2)

Procedures

The procedures in any forfeiture under this subsection, and the duties and authority of the courts of the United States and the Attorney General with respect to any forfeiture action under this subsection or with respect to any property that may be subject to forfeiture under this subsection, shall be governed by the provisions of section 1963 of title 18, United States Code.

(e)

Prior convictions

(1)

License bar

(A)

In general

The Secretary may—

(i)

deny the eligibility of any person convicted of a criminal violation described in subparagraph (B) to export, reexport, or transfer outside the United States any item, whether or not subject to controls under this subtitle, for a period of up to 10 years beginning on the date of the conviction; and

(ii)

revoke any license or other authorization to export, reexport, or transfer items that was issued under this subtitle and in which such person has an interest at the time of the conviction.

(B)

Violations

The violations referred to in subparagraph (A) are any criminal violations of, or criminal attempt or conspiracy to violate—

(i)

this subtitle (or any regulation, license, or order issued under this subtitle);

(ii)

any regulation, license, or order issued under the International Emergency Economic Powers Act;

(iii)

section 371, 554, 793, 794, or 798 of title 18, United States Code;

(iv)

section 1001 of title 18, United States Code;

(v)

section 4(b) of the Internal Security Act of 1950 (50 U.S.C. 783(b)); or

(vi)

section 38 of the Arms Export Control Act (22 U.S.C. 2778).

(2)

Application to other parties

The Secretary may exercise the authority under paragraph (1) with respect to any person related, through affiliation, ownership, control, position of responsibility, or other connection in the conduct of trade or business, to any person convicted of any violation of law set forth in paragraph (1), upon a showing of such relationship with the convicted party, and subject to the procedures set forth in subsection (c)(2).

(f)

Other authorities

Nothing in subsection (c), (d), or (e) limits—

(1)

the availability of other administrative or judicial remedies with respect to violations of this subtitle, or any regulation, order, license or other authorization issued under this subtitle;

(2)

the authority to compromise and settle administrative proceedings brought with respect to violations of this subtitle, or any regulation, order, license, or other authorization issued under this subtitle; or

(3)

the authority to compromise, remit or mitigate seizures and forfeitures pursuant to section 1(b) of title VI of the Act of June 15, 1917 (22 U.S.C. 401(b)).

822.

Enforcement

(a)

Authorities

In order to enforce this subtitle, the President shall delegate to the heads of other appropriate Federal departments and agencies the authority to—

(1)

issue regulations, orders, and guidelines;

(2)

require, inspect, and obtain books, records, and any other information from any person subject to the provisions of this subtitle;

(3)

administer oaths or affirmations and by subpoena require any person to appear and testify or to appear and produce books, records, and other writings, or both;

(4)

conduct investigations (including undercover) in the United States and in other countries using all applicable laws of the United States, including intercepting any wire, oral, and electronic communications, conducting electronic surveillance, using pen registers and trap and trace devices, and carrying out acquisitions, to the extent authorized under chapters 119, 121, and 206 of title 18, United States Code;

(5)

inspect, search, detain, seize, or issue temporary denial orders with respect to items, in any form, that are subject to controls under this subtitle, or conveyances on which it is believed that there are items that have been, are being, or are about to be exported, reexported, or transferred in violation of this subtitle, or any regulations, order, license, or other authorization issued thereunder;

(6)

carry firearms;

(7)

conduct prelicense inspections and post-shipment verifications; and

(8)

execute warrants and make arrests.

(b)

Enforcement of subpoenas

In the case of contumacy by, or refusal to obey a subpoena issued to, any person under subsection (a)(3), a district court of the United States, after notice to such person and a hearing, shall have jurisdiction to issue an order requiring such person to appear and give testimony or to appear and produce books, records, and other writings, regardless of format, that are the subject of the subpoena. Any failure to obey such order of the court may be punished by such court as a contempt thereof.

(c)

Best practice guidelines

(1)

In general

The Secretary, in consultation with the heads of other appropriate Federal agencies, should publish and update best practices guidelines to assist persons in developing and implementing, on a voluntary basis, effective export control programs in compliance with the regulations issued under this subtitle.

(2)

Export compliance program

The implementation by a person of an effective export compliance program and a high quality overall export compliance effort by a person should ordinarily be given weight as mitigating factors in a civil penalty action against the person under this subtitle.

(d)

Reference to enforcement

For purposes of this section, a reference to the enforcement of, or a violation of, this subtitle includes a reference to the enforcement or a violation of any regulation, order, license or other authorization issued pursuant to this subtitle.

(e)

Immunity

A person shall not be excused from complying with any requirements under this section because of the person’s privilege against self-incrimination, but the immunity provisions of section 6002 of title 18, United States Code, shall apply with respect to any individual who specifically claims such privilege.

(f)

Confidentiality of information

(1)

Exemptions from disclosure

(A)

In general

Information obtained under this subtitle may be withheld from disclosure only to the extent permitted by statute, except that information described in subparagraph (B) shall be withheld from public disclosure and shall not be subject to disclosure under section 552(b)(3) of title 5, United States Code, unless the release of such information is determined by the Secretary to be in the national interest.

(B)

Information described

Information described in this subparagraph is information submitted or obtained in connection with an application for a license or other authorization to export, reexport, or transfer items, engage in other activities, a recordkeeping or reporting requirement, enforcement activity, or other operations under this subtitle, including—

(i)

the license application, license, or other authorization itself;

(ii)

classification or advisory opinion requests, and the response thereto;

(iii)

license determinations, and information pertaining thereto;

(iv)

information or evidence obtained in the course of any investigation; and

(v)

information obtained or furnished in connection with any international agreement, treaty, or other obligation.

(2)

Information to the Congress and GAO

(A)

In general

Nothing in this section shall be construed as authorizing the withholding of information from the Congress or from the Government Accountability Office.

(B)

Availability to the Congress

(i)

In general

Any information obtained at any time under any provision of the Export Administration Act of 1979 (as in effect on the day before the date of the enactment of this Act and as continued in effect pursuant to the International Emergency Economic Powers Act), under the Export Administration Regulations, or under this subtitle, including any report or license application required under any such provision, shall be made available to a committee or subcommittee of Congress of appropriate jurisdiction, upon the request of the chairman or ranking minority member of such committee or subcommittee.

(ii)

Prohibition on further disclosure

No such committee or subcommittee, or member thereof, may disclose any information made available under clause (i), that is submitted on a confidential basis unless the full committee determines that the withholding of that information is contrary to the national interest.

(C)

Availability to GAO

(i)

In general

Information described in clause (i) of subparagraph (B) shall be subject to the limitations contained in section 716 of title 31, United States Code.

(ii)

Prohibition on further disclosure

An officer or employee of the Government Accountability Office may not disclose, except to the Congress in accordance with this paragraph, any such information that is submitted on a confidential basis or from which any individual can be identified.

(3)

Information sharing

(A)

In general

Any Federal official described in section 815(a) who obtains information that is relevant to the enforcement of this subtitle, including information pertaining to any investigation, shall furnish such information to each appropriate department, agency, or office with enforcement responsibilities under this section to the extent consistent with the protection of intelligence, counterintelligence, and law enforcement sources, methods, and activities.

(B)

Exceptions

The provisions of this paragraph shall not apply to information subject to the restrictions set forth in section 9 of title 13, United States Code, and return information, as defined in subsection (b) of section 6103 of the Internal Revenue Code of 1986 (26 U.S.C. 6103(b)), may be disclosed only as authorized by that section.

(C)

Exchange of information

The President shall ensure that the heads of departments, agencies, and offices with enforcement authorities under this subtitle, consistent with protection of law enforcement and its sources and methods—

(i)

exchange any licensing and enforcement information with one another that is necessary to facilitate enforcement efforts under this section; and

(ii)

consult on a regular basis with one another and with the head of other departments, agencies, and offices that obtain information subject to this paragraph, in order to facilitate the exchange of such information.

(D)

Information sharing with Federal agencies

Licensing or enforcement information obtained under this subtitle may be shared with heads of departments, agencies, and offices that do not have enforcement authorities under this subtitle on a case-by-case basis at the discretion of the President. Such information may be shared only when the President makes a determination that the sharing of this information is in the national interest.

(g)

Reporting requirements

In the administration of this section, reporting requirements shall be designed to reduce the cost of reporting, recordkeeping, and documentation to the extent consistent with effective enforcement and compilation of useful trade statistics. Reporting, recordkeeping, and documentation requirements shall be periodically reviewed and revised in the light of developments in the field of information technology.

(h)

Civil forfeiture

(1)

In general

Any tangible items seized under subsection (a) by designated officers or employees shall be subject to forfeiture to the United States in accordance with applicable law, except that property seized shall be returned if the property owner is not found guilty of a civil or criminal violation under section 819.

(2)

Procedures

Any seizure or forfeiture under this subsection shall be carried out in accordance with the procedures set forth in section 981 of title 18, United States Code.

823.

Administrative procedure

(a)

In general

The functions exercised under this subtitle shall not be subject to sections 551, 553 through 559, and 701 through 706 of title 5, United States Code.

(b)

Administrative law judges

The Secretary is authorized to appoint an administrative law judge, and may designate administrative law judges from other Federal agencies who are provided pursuant to a legally authorized interagency agreement with the Department of Commerce, and consistent with the provisions of section 3105 of title 5, United States Code.

(c)

Amendments to regulations

The President shall notify in advance the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Foreign Affairs of the House of Representatives of any proposed amendments to the Export Administration Regulations with an explanation of the intent and rationale of such amendments.

824.

Annual report to Congress

(a)

In general

The President shall submit to Congress, by December 31 of each year, a report on the implementation of this subtitle during the preceding fiscal year. The report shall include a review of—

(1)

the effect of controls imposed under this subtitle on exports, reexports, and transfers of items in addressing threats to the national security or foreign policy of the United States, including a description of licensing processing times;

(2)

the impact of such controls on the scientific and technological leadership of the United States;

(3)

the consistency with such controls of export controls imposed by other countries;

(4)

efforts to provide exporters with compliance assistance, including specific actions to assist small- and medium-sized businesses;

(5)

a summary of regulatory changes from the prior fiscal year;

(6)

a summary of export enforcement actions, including of actions taken to implement end-use monitoring of dual-use, military, and other items subject to the Export Administration Regulations;

(7)

a summary of approved license applications to proscribed persons;

(8)

efforts undertaken within the previous year to comply with the requirements of section 819, including any critical technologies identified under such section and how or whether such critical technologies were controlled for export; and

(9)

a summary of industrial base assessments conducted during the previous year by the Department of Commerce, including with respect to counterfeit electronics, foundational technologies, and other research and analysis of critical technologies and industrial capabilities of key defense-related sectors.

(b)

Form

The report required under subsection (a) shall be submitted in unclassified form, but may contain a classified annex.

825.

Repeal

(a)

In general

The Export Administration Act of 1979 (50 U.S.C. App. 2401 et seq.) (as continued in effect pursuant to the International Emergency Economic Powers Act) is repealed.

(b)

Implementation

The President shall implement the amendment made by subsection (a) by exercising the authorities of the President under the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.).

826.

Effect on other Acts

(a)

In general

Except as otherwise provided in this subtitle, nothing contained in this subtitle shall be construed to modify, repeal, supersede, or otherwise affect the provisions of any other laws authorizing control over exports, reexports, or transfers of any item, or activities of United States persons subject to the Export Administration Regulations.

(b)

Coordination of controls

(1)

In general

The authority granted to the President under this subtitle shall be exercised in such manner so as to achieve effective coordination with all export control and sanctions authorities exercised by Federal departments and agencies delegated with authority under this subtitle, particularly the Department of State, the Department of the Treasury, and the Department of Energy.

(2)

Sense of Congress

It is the sense of Congress that in order to achieve effective coordination described in paragraph (1), such Federal departments and agencies—

(A)

should continuously work to create enforceable regulations with respect to the export, reexport, and transfer by United States and foreign persons of commodities, software, technology, and services to various end uses and end users for foreign policy and national security reasons;

(B)

should regularly work to reduce complexity in the system, including complexity caused merely by the existence of structural, definitional, and other non-policy based differences between and among different export control and sanctions systems; and

(C)

should coordinate controls on items exported, reexported, or transferred in connection with a foreign military sale under chapter 2 of the Arms Export Control Act or a commercial sale under section 38 of the Arms Export Control Act to reduce as much unnecessary administrative burden as possible that is a result of differences between the exercise of those two authorities.

(c)

Nonproliferation controls

Nothing in this subtitle shall be construed to supersede the procedures published by the President pursuant to section 309(c) of the Nuclear Non-Proliferation Act of 1978.

827.

Transition provisions

(a)

In general

All delegations, rules, regulations, orders, determinations, licenses, or other forms of administrative action that have been made, issued, conducted, or allowed to become effective under the Export Administration Act of 1979 (as in effect on the day before the date of the enactment of this Act and as continued in effect pursuant to the International Emergency Economic Powers Act), or the Export Administration Regulations, and are in effect as of the date of the enactment of this Act, shall continue in effect according to their terms until modified, superseded, set aside, or revoked under the authority of this subtitle.

(b)

Administrative and judicial proceedings

This subtitle shall not affect any administrative or judicial proceedings commenced, or any applications for licenses made, under the Export Administration Act of 1979 (as in effect on the day before the date of the enactment of this Act and as continued in effect pursuant to the International Emergency Economic Powers Act), or the Export Administration Regulations.

(c)

Certain determinations and references

(1)

State sponsors of terrorism

Any determination that was made under section 6(j) of the Export Administration Act of 1979 (as in effect on the day before the date of the enactment of this Act and as continued in effect pursuant to the International Emergency Economic Powers Act) shall continue in effect as if the determination had been made under section 814(c) of this Act.

(2)

Reference

Any reference in any other provision of law to a country the government of which the Secretary of State has determined, for purposes of section 6(j) of the Export Administration Act of 1979 (as in effect on the day before the date of the enactment of this Act and as continued in effect pursuant to the International Emergency Economic Powers Act), is a government that has repeatedly provided support for acts of international terrorism shall be deemed to refer to a country the government of which the Secretary of State has determined, for purposes of section 814(c), is a government that has repeatedly provided support for acts of international terrorism.

B

Anti-Boycott Act of 2018

831.

Short title

This subtitle may be cited as the Anti-Boycott Act of 2018.

832.

Statement of policy

Congress declares it is the policy of the United States—

(1)

to oppose restrictive trade practices or boycotts fostered or imposed by any foreign country against other countries friendly to the United States or against any United States person;

(2)

to encourage and, in specified cases, require United States persons engaged in the export of goods or technology or other information to refuse to take actions, including furnishing information or entering into or implementing agreements, which have the effect of furthering or supporting the restrictive trade practices or boycotts fostered or imposed by any foreign country against any United States person; and

(3)

to foster international cooperation and the development of international rules and institutions to assure reasonable access to world supplies.

833.

Foreign boycotts

(a)

Prohibitions and exceptions

(1)

Prohibitions

For the purpose of implementing the policies set forth in section 832, the President shall issue regulations prohibiting any United States person, with respect to that person’s activities in the interstate or foreign commerce of the United States, from taking or knowingly agreeing to take any of the following actions with intent to comply with, further, or support any boycott fostered or imposed by any foreign country, against a country which is friendly to the United States and which is not itself the object of any form of boycott pursuant to United States law or regulation:

(A)

Refusing, or requiring any other person to refuse, to do business with or in the boycotted country, with any business concern organized under the laws of the boycotted country, with any national or resident of the boycotted country, or with any other person, pursuant to an agreement with, a requirement of, or a request from or on behalf of the boycotting country. The mere absence of a business relationship with or in the boycotted country with any business concern organized under the laws of the boycotted country, with any national or resident of the boycotted country, or with any other person, does not indicate the existence of the intent required to establish a violation of regulations issued to carry out this subparagraph.

(B)

Refusing, or requiring any other person to refuse, to employ or otherwise discriminating against any United States person on the basis of race, religion, sex, or national origin of that person or of any owner, officer, director, or employee of such person.

(C)

Furnishing information with respect to the race, religion, sex, or national origin of any United States person or of any owner, officer, director, or employee of such person.

(D)

Furnishing information, or requesting the furnishing of information, about whether any person has, has had, or proposes to have any business relationship (including a relationship by way of sale, purchase, legal or commercial representation, shipping or other transport, insurance, investment, or supply) with or in the boycotted country, with any business concern organized under the laws of the boycotted country, with any national or resident of the boycotted country, or with any other person which is known or believed to be restricted from having any business relationship with or in the boycotting country. Nothing in this subparagraph shall prohibit the furnishing of normal business information in a commercial context as defined by the Secretary.

(E)

Furnishing information about whether any person is a member of, has made contributions to, or is otherwise associated with or involved in the activities of any charitable or fraternal organization which supports the boycotted country.

(F)

Paying, honoring, confirming, or otherwise implementing a letter of credit which contains any condition or requirement compliance with which is prohibited by regulations issued pursuant to this paragraph, and no United States person shall, as a result of the application of this paragraph, be obligated to pay or otherwise honor or implement such letter of credit.

(2)

Exceptions

Regulations issued pursuant to paragraph (1) shall provide exceptions for—

(A)

complying or agreeing to comply with requirements—

(i)

prohibiting the import of goods or services from the boycotted country or goods produced or services provided by any business concern organized under the laws of the boycotted country or by nationals or residents of the boycotted country; or

(ii)

prohibiting the shipment of goods to the boycotting country on a carrier of the boycotted country, or by a route other than that prescribed by the boycotting country or the recipient of the shipment;

(B)

complying or agreeing to comply with import and shipping document requirements with respect to the country of origin, the name of the carrier and route of shipment, the name of the supplier of the shipment or the name of the provider of other services, except that no information knowingly furnished or conveyed in response to such requirements may be stated in negative, blacklisting, or similar exclusionary terms, other than with respect to carriers or route of shipment as may be permitted by such regulations in order to comply with precautionary requirements protecting against war risks and confiscation;

(C)

complying or agreeing to comply in the normal course of business with the unilateral and specific selection by a boycotting country, or national or resident thereof, of carriers, insurers, suppliers of services to be performed within the boycotting country or specific goods which, in the normal course of business, are identifiable by source when imported into the boycotting country;

(D)

complying or agreeing to comply with export requirements of the boycotting country relating to shipments or transshipments of exports to the boycotted country, to any business concern of or organized under the laws of the boycotted country, or to any national or resident of the boycotted country;

(E)

compliance by an individual or agreement by an individual to comply with the immigration or passport requirements of any country with respect to such individual or any member of such individual's family or with requests for information regarding requirements of employment of such individual within the boycotting country; and

(F)

compliance by a United States person resident in a foreign country or agreement by such person to comply with the laws of that country with respect to his activities exclusively therein, and such regulations may contain exceptions for such resident complying with the laws or regulations of that foreign country governing imports into such country of trademarked, trade named, or similarly specifically identifiable products, or components of products for his own use, including the performance of contractual services within that country, as may be defined by such regulations.

(3)

Special rules

Regulations issued pursuant to paragraphs (2)(C) and (2)(F) shall not provide exceptions from paragraphs (1)(B) and (1)(C).

(4)

Rule of construction

Nothing in this subsection may be construed to supersede or limit the operation of the antitrust or civil rights laws of the United States.

(5)

Application

This section shall apply to any transaction or activity undertaken, by or through a United States person or any other person, with intent to evade the provisions of this section as implemented by the regulations issued pursuant to this subsection, and such regulations shall expressly provide that the exceptions set forth in paragraph (2) shall not permit activities or agreements (expressed or implied by a course of conduct, including a pattern of responses) otherwise prohibited, which are not within the intent of such exceptions.

(b)

Foreign policy controls

(1)

In general

In addition to the regulations issued pursuant to subsection (a), regulations issued under subtitle A to carry out the policies set forth in section 812(1)(D) shall implement the policies set forth in this section.

(2)

Requirements

Such regulations shall require that any United States person receiving a request for the furnishing of information, the entering into or implementing of agreements, or the taking of any other action referred to in subsection (a) shall report that fact to the Secretary, together with such other information concerning such request as the Secretary may require for such action as the Secretary considers appropriate for carrying out the policies of that section. Such person shall also report to the Secretary whether such person intends to comply and whether such person has complied with such request. Any report filed pursuant to this paragraph shall be made available promptly for public inspection and copying, except that information regarding the quantity, description, and value of any goods or technology to which such report relates may be kept confidential if the Secretary determines that disclosure thereof would place the United States person involved at a competitive disadvantage. The Secretary shall periodically transmit summaries of the information contained in such reports to the Secretary of State for such action as the Secretary of State, in consultation with the Secretary, considers appropriate for carrying out the policies set forth in section 832.

(c)

Preemption

The provisions of this section and the regulations issued pursuant thereto shall preempt any law, rule, or regulation of any of the several States or the District of Columbia, or any of the territories or possessions of the United States, or of any governmental subdivision thereof, which law, rule, or regulation pertains to participation in, compliance with, implementation of, or the furnishing of information regarding restrictive trade practices or boycotts fostered or imposed by foreign countries against other countries friendly to the United States.

834.

Enforcement

(a)

Criminal penalty

A person who willfully commits, willfully attempts to commit, or willfully conspires to commit, or aids or abets in the commission of, an unlawful act section 833—

(1)

shall, upon conviction, be fined not more than $1,000,000; or

(2)

if a natural person, may be imprisoned for not more than 20 years, or both.

(b)

Civil penalties

The President may impose the following civil penalties on a person who violates section 833 or any regulation issued under this subtitle:

(1)

A fine of not more than $300,000 or an amount that is twice the value of the transaction that is the basis of the violation with respect to which the penalty is imposed, whichever is greater.

(2)

Revocation of a license issued under title I to the person.

(3)

A prohibition on the person’s ability to export, reexport, or transfer any items controlled under subtitle A.

(c)

Procedures

Any civil penalty or administrative sanction (including any suspension or revocation of authority to export) under this section may be imposed only after notice and opportunity for an agency hearing on the record in accordance with sections 554 through 557 of title 5, United States Code, and shall be subject to judicial review in accordance with chapter 7 of such title.

(d)

Standards for levels of civil penalty

The President may by regulation provide standards for establishing levels of civil penalty under this section based upon factors such as the seriousness of the violation, the culpability of the violator, and the violator’s record of cooperation with the Government in disclosing the violation.

C

Sanctions Regarding Missile Proliferation and Chemical and Biological Weapons Proliferation

841.

Missile proliferation control violations

(a)

Violations by United States persons

(1)

Sanctions

(A)

Sanctionable activity

The President shall impose the applicable sanctions described in subparagraph (B) if the President determines that a United States person knowingly—

(i)

exports, reexports, or transfers of any item on the MTCR Annex, in violation of the provisions of section 38 (22 U.S.C. 2778) or chapter 7 of the Arms Export Control Act, subtitle A, or any regulations or orders issued under any such provisions; or

(ii)

conspires to or attempts to engage in such export, reexport, or transfer.

(B)

Sanctions

The sanctions that apply to a United States person under subparagraph (A) are the following:

(i)

If the item on the MTCR Annex involved in the export, reexport, or transfer is missile equipment or technology within category II of the MTCR Annex, then the President shall deny to such United States person, for a period of 2 years, licenses for the transfer of missile equipment or technology controlled under subtitle A.

(ii)

If the item on the MTCR Annex involved in the export, reexport, or transfer is missile equipment or technology within category I of the MTCR Annex, then the President shall deny to such United States person, for a period of not less than 2 years, all licenses for items the transfer of which is controlled under subtitle A.

(2)

Discretionary sanctions

In the case of any determination referred to in paragraph (1), the President may pursue any other appropriate penalties under section 820.

(3)

Waiver

The President may waive the imposition of sanctions under paragraph (1) on a person with respect to a product or service if the President certifies to the Congress that—

(A)

the product or service is essential to the national security of the United States; and

(B)

such person is a sole source supplier of the product or service, the product or service is not available from any alternative reliable supplier, and the need for the product or service cannot be met in a timely manner by improved manufacturing processes or technological developments.

(b)

Transfers of missile equipment or technology by foreign persons

(1)

Sanctions

(A)

Sanctionable activity

Subject to paragraphs (3) through (7), the President shall impose the applicable sanctions under subparagraph (B) on a foreign person if the President—

(i)

determines that a foreign person knowingly—

(I)

exports, reexports, or transfers any MTCR equipment or technology that contributes to the design, development, or production of missiles in a country that is not an MTCR adherent and would be, if it were United States-origin equipment or technology, subject to the jurisdiction of the United States under subtitle A;

(II)

conspires to or attempts to engage in such export, reexport, or transfer; or

(III)

facilitates such export, reexport, or transfer by any other person; or

(ii)

has made a determination with respect to the foreign person under section 73(a) of the Arms Export Control Act.

(B)

Sanctions

The sanctions that apply to a foreign person under subparagraph (A) are the following:

(i)

If the item involved in the export, reexport, or transfer is within category II of the MTCR Annex, then the President shall deny, for a period of 2 years, licenses for the transfer to such foreign person of missile equipment or technology the transfer of which is controlled under subtitle A.

(ii)

If the item involved in the export, reexport, or transfer is within category I of the MTCR Annex, then the President shall deny, for a period of not less than 2 years, licenses for the transfer to such foreign person of items the transfer of which is controlled under subtitle A.

(2)

Inapplicability with respect to MTCR adherents

Paragraph (1) does not apply with respect to—

(A)

any export, reexport, or transfer that is authorized by the laws of an MTCR adherent, if such authorization is not obtained by misrepresentation or fraud; or

(B)

any export, reexport, or transfer of an item to an end user in a country that is an MTCR adherent.

(3)

Effect of enforcement actions by MTCR adherents

Sanctions set forth in paragraph (1) may not be imposed under this subsection on a person with respect to acts described in such paragraph or, if such sanctions are in effect against a person on account of such acts, such sanctions shall be terminated, if an MTCR adherent is taking judicial or other enforcement action against that person with respect to such acts, or that person has been found by the government of an MTCR adherent to be innocent of wrongdoing with respect to such acts.

(4)

Waiver and report to Congress

(A)

Waiver authority

The President may waive the application of paragraph (1) to a foreign person if the President determines that such waiver is essential to the national security of the United States.

(B)

Notification and report to Congress

In the event that the President decides to apply the waiver described in subparagraph (A), the President shall so notify the appropriate congressional committees not less than 20 working days before issuing the waiver. Such notification shall include a report fully articulating the rationale and circumstances which led the President to apply the waiver.

(5)

Additional waiver

The President may waive the imposition of sanctions under paragraph (1) on a person with respect to a product or service if the President certifies to the appropriate congressional committees that—

(A)

the product or service is essential to the national security of the United States; and

(B)

such person is a sole source supplier of the product or service, the product or service is not available from any alternative reliable supplier, and the need for the product or service cannot be met in a timely manner by improved manufacturing processes or technological developments.

(6)

Exceptions

The President shall not apply the sanction under this subsection prohibiting the importation of the products of a foreign person—

(A)

in the case of procurement of defense articles or defense services—

(i)

under existing contracts or subcontracts, including the exercise of options for production quantities to satisfy requirements essential to the national security of the United States;

(ii)

if the President determines that the person to which the sanctions would be applied is a sole source supplier of the defense articles or defense services, that the defense articles or defense services are essential to the national security of the United States, and that alternative sources are not readily or reasonably available; or

(iii)

if the President determines that such articles or services are essential to the national security of the United States under defense coproduction agreements or NATO Programs of Cooperation;

(B)

to products or services provided under contracts entered into before the date on which the President publishes his intention to impose the sanctions; or

(C)

to—

(i)

spare parts;

(ii)

component parts, but not finished products, essential to United States products or production;

(iii)

routine services and maintenance of products, to the extent that alternative sources are not readily or reasonably available; or

(iv)

information and technology essential to United States products or production.

(c)

Definitions

In this section:

(1)

Appropriate congressional committees

The term appropriate congressional committees means—

(A)

the Committee on Foreign Affairs of the House of Representatives; and

(B)

the Committee on Foreign Relations and the Committee on Banking, Housing, and Urban Affairs of the Senate.

(2)

Defense articles; defense services

The terms defense articles and defense services mean those items on the United States Munitions List as defined in section 47(7) of the Arms Export Control Act (22 U.S.C. 2794 note).

(3)

Missile

The term missile means a category I system as defined in the MTCR Annex.

(4)

Missile technology control regime; MTCR

The term Missile Technology Control Regime or MTCR means the policy statement, between the United States, the United Kingdom, the Federal Republic of Germany, France, Italy, Canada, and Japan, announced on April 16, 1987, to restrict sensitive missile-relevant transfers based on the MTCR Annex, and any amendments thereto.

(5)

MTCR adherent

The term MTCR adherent means a country that participates in the MTCR or that, pursuant to an international understanding to which the United States is a party, controls MTCR equipment or technology in accordance with the criteria and standards set forth in the MTCR.

(6)

MTCR annex

The term MTCR Annex means the Guidelines and Equipment and Technology Annex of the MTCR, and any amendments thereto.

(7)

Missile equipment or technology; MTCR equipment or technology

The terms missile equipment or technology and MTCR equipment or technology mean those items listed in category I or category II of the MTCR Annex.

842.

Chemical and biological weapons proliferation sanctions

(a)

Imposition of sanctions

(1)

Determination by the President

Except as provided in subsection (b)(2), the President shall impose the sanction described in subsection (c) if the President determines that a foreign person has knowingly and materially contributed—

(A)

through the export from the United States of any item that is subject to the jurisdiction of the United States under this subtitle; or

(B)

through the export from any other country of any item that would be, if they were United States goods or technology, subject to the jurisdiction of the United States under this subtitle,

to the efforts by any foreign country, project, or entity described in paragraph (2) to use, develop, produce, stockpile, or otherwise acquire chemical or biological weapons.
(2)

Countries, projects, or entities receiving assistance

Paragraph (1) applies in the case of—

(A)

any foreign country that the President determines has, at any time after January 1, 1980—

(i)

used chemical or biological weapons in violation of international law;

(ii)

used lethal chemical or biological weapons against its own nationals; or

(iii)

made substantial preparations to engage in the activities described in clause (i) or (ii);

(B)

any foreign country whose government is determined for purposes of section 914(c) to be a government that has repeatedly provided support for acts of international terrorism; or

(C)

any other foreign country, project, or entity designated by the President for purposes of this section.

(3)

Persons against which sanctions are to be imposed

A sanction shall be imposed pursuant to paragraph (1) on—

(A)

the foreign person with respect to which the President makes the determination described in that paragraph;

(B)

any successor entity to that foreign person; and

(C)

any foreign person that is a parent, subsidiary, or affiliate of that foreign person if that parent, subsidiary, or affiliate knowingly assisted in the activities which were the basis of that determination.

(b)

Consultations with and actions by foreign government of jurisdiction

(1)

Consultations

If the President makes the determinations described in subsection (a)(1) with respect to a foreign person, the Congress urges the President to initiate consultations immediately with the government with primary jurisdiction over that foreign person with respect to the imposition of a sanction pursuant to this section.

(2)

Actions by government of jurisdiction

In order to pursue such consultations with that government, the President may delay imposition of a sanction pursuant to this section for a period of up to 90 days. Following such consultations, the President shall impose the sanction unless the President determines and certifies to the appropriate congressional committees that the Government has taken specific and effective actions, including appropriate penalties, to terminate the involvement of the foreign person in the activities described in subsection (a)(1). The President may delay imposition of the sanction for an additional period of up to 90 days if the President determines and certifies to the Congress that the government is in the process of taking the actions described in the preceding sentence.

(3)

Report to Congress

The President shall report to the appropriate congressional committees, not later than 90 days after making a determination under subsection (a)(1), on the status of consultations with the appropriate government under this subsection, and the basis for any determination under paragraph (2) of this subsection that such government has taken specific corrective actions.

(c)

Sanction

(1)

Description of sanction

The sanction to be imposed pursuant to subsection (a)(1) is, except as provided that the United States Government shall not procure, or enter into any contract for the procurement of, any goods or services from any person described in subsection (a)(3).

(2)

Exceptions

The President shall not be required to apply or maintain a sanction under this section—

(A)

in the case of procurement of defense articles or defense services—

(i)

under existing contracts or subcontracts, including the exercise of options for production quantities to satisfy United States operational military requirements;

(ii)

if the President determines that the person or other entity to which the sanctions would otherwise be applied is a sole source supplier of the defense articles or defense services, that the defense articles or defense services are essential, and that alternative sources are not readily or reasonably available; or

(iii)

if the President determines that such articles or services are essential to the national security under defense coproduction agreements;

(B)

to products or services provided under contracts entered into before the date on which the President publishes his intention to impose sanctions;

(C)

to—

(i)

spare parts;

(ii)

component parts, but not finished products, essential to United States products or production; or

(iii)

routine servicing and maintenance of products, to the extent that alternative sources are not readily or reasonably available;

(D)

to information and technology essential to United States products or production; or

(E)

to medical or other humanitarian items.

(d)

Termination of sanctions

A sanction imposed pursuant to this section shall apply for a period of at least 12 months following the imposition of one sanction and shall cease to apply thereafter only if the President determines and certifies to the appropriate congressional committees that reliable information indicates that the foreign person with respect to which the determination was made under subsection (a)(1) has ceased to aid or abet any foreign government, project, or entity in its efforts to acquire chemical or biological weapons capability as described in that subsection.

(e)

Waiver

(1)

Criterion for waiver

The President may waive the application of any sanction imposed on any person pursuant to this section if the President determines and certifies to the appropriate congressional committees that such waiver is important to the national security interests of the United States.

(2)

Notification of and report to Congress

If the President decides to exercise the waiver authority provided in paragraph (1), the President shall so notify the appropriate congressional committees not less than 20 days before the waiver takes effect. Such notification shall include a report fully articulating the rationale and circumstances which led the President to exercise the waiver authority.

(f)

Definitions

In this section:

(1)

Appropriate congressional committees

The term appropriate congressional committees means—

(A)

the Committee on Foreign Affairs of the House of Representatives; and

(B)

the Committee on Foreign Relations and the Committee on Banking, Housing, and Urban Affairs of the Senate.

(2)

Defense articles; defense services

The terms defense articles and defense services mean those items on the United States Munitions List or are otherwise controlled under the Arms Export Control Act.

D

Administrative authorities

851.

Under Secretary of Commerce for Industry and Security

(a)

Appointment

(1)

In general

The President shall appoint, by and with the advice and consent of the Senate, an Under Secretary of Commerce for Industry and Security who shall carry out all the functions of the Secretary under this title and such other provisions of law that relate to the implementation of the dual-use export system.

(2)

Assistant Secretaries of Commerce

The President shall appoint, by and with the advice and consent of the Senate, two Assistant Secretaries of Commerce to assist the Under Secretary in carrying out the functions described in paragraph (1).

(b)

Delegation

(1)

To Secretary

The President shall continue the delegation of functions to the Secretary to administer and enforce the export control system authorized by this title that were delegated to the Secretary as of the day before the date of the enactment of this Act.

(2)

To Bureau of Industry and Security

The Secretary shall further delegate implementation of the authorities set forth in this title to the Bureau of Industry and Security within the Department of Commerce.