Governmentevaluating public feedback on provisional regulation concerning International Communications Technology Services
The U.S. Commerce Department has published an interim final rule (IFR) on securing the information and communications technology and services (ICTS) supply chain, first introduced in May 2019 by Executive Order 13873. The IFR, effective from March 22, 2021, outlines a framework for identifying, mitigating, prohibiting, or unwinding covered transactions involving foreign adversaries that pose an undue or unacceptable risk to U.S. national security.
The IFR defines an "ICTS Transaction" as any acquisition, importation, transfer, installation, dealing in, or use of any information and communications technology or service. It creates a list of ICTS categories, including Critical Infrastructure, Networking, Hosting and Storage of Sensitive Personal Data, Widely Sold Surveillance, Monitoring, or Networking Devices, Widely Used Internet Communications Applications, and Emerging Technologies.
The rule considers ICTS Transactions that involve ICTS designed, developed, manufactured, or supplied by persons owned by, controlled by, or subject to the jurisdiction or direction of a "foreign adversary." The IFR designates China (including Hong Kong), Cuba, Iran, North Korea, Russia, and Venezuela's Maduro regime as "foreign adversaries."
The IFR does not impose immediate prohibitions but establishes a pre-clearance licensing mechanism for potentially covered transactions. Parties to a transaction under review will only be informed that the Secretary is reviewing their transaction and that it should be prohibited or requires mitigation when they are provided copies of Commerce's initial written determination explaining its rationale.
The IFR does not generally capture common carriers transporting ICTS goods, unless they know, or should have known, they were providing transportation services related to prohibited transactions. It also does not apply to the acquisition of ICTS items by a United States person as a party to a transaction authorized under a "U.S. government-industrial security program," which likely includes the National Industrial Security Program.
Interested parties may submit comments on the IFR on or before March 22, 2021. The public comment period for the implementation of the ICTS regulation by the US Trade Authority will end on September 30, 2025.
The Biden administration is actively reconsidering the IFR, so any interested parties should consider filing public comment to influence the administration's decision on how to proceed with implementation of the rule. Final determinations will be published in the Federal Register, omitting any confidential business information. Parties will have 30 days to respond to the initial written determination.
As the Biden administration assesses its approach on national security and supply chain issues, including the IFR, it remains to be seen whether the administration will alter, revoke, or delay the IFR prior to March 22.
