Export Classification in Advance of CFIUS Filings

Introduction

The Committee on Foreign Investment in the United States (CFIUS) is an interagency committee that reviews certain transactions involving foreign investment in U.S. businesses to protect national security. In recent years, the scope of CFIUS reviews has expanded to cover B'critical technologies, sensitive personal data, and infrastructure-related investments'.

For companies involved in foreign investments or acquisitions, one of the key preparatory steps before a CFIUS filing is export classification. Properly classifying technology, software, or products helps determine whether the transaction requires specific export licenses or may be subject to heightened scrutiny under U.S. export control laws, including the Export Administration Regulations (EAR) and the International Traffic in Arms Regulations (ITAR).

Understanding export classification before submitting a CFIUS notice ensures compliance, mitigates risk, and facilitates smoother review timelines.

Key Details About Export Classification Before CFIUS Filings

1. Identify Controlled Technologies

The first step in export classification is identifying whether the company’s products or technologies are controlled under U.S. export regulations:

• EAR-controlled technologies: Items on the Commerce Control List (CCL) may require a license for exports or transfers to foreign parties.
• ITAR-controlled technologies: Defense articles and related technical data on the U.S. Munitions List (USML) require strict licensing and registration with the Department of State.

Accurately identifying controlled technologies helps assess whether the foreign investment could trigger licensing requirements or CFIUS national security concerns.

2. Determine Export Control Classification Number (ECCN)

For items under the EAR, companies must assign an B'Export Control Classification Number (ECCN)'. The ECCN determines the licensing requirements based on:

• Nature of the item (hardware, software, or technology)‍
• Technical specifications‍
• Destination country and
• Foreign party or parties involved

Obtaining the correct ECCN is critical because CFIUS may review whether foreign investors could gain access to controlled technologies, potentially affecting the approval of the transaction.

3. Assess License Requirements

After identifying the ECCN or ITAR classification, companies must evaluate B'export license requirements'. This includes determining whether:

• The foreign investor is from a restricted or sanctioned country‍
• The transaction involves critical or emerging technologies that may require Department of Commerce review
• An ITAR license or an EAR license is necessary for sharing controlled technical data

Understanding license requirements ensures that no unauthorized transfers occur during the investment review process.

4. Document Technology Transfers

CFIUS filings often include information on B'how foreign investors will interact with U.S. technologies. Export classification helps:

• Document the nature of controlled technologies involved in the transaction
• Demonstrate compliance with EAR or ITAR licensing obligations‍
• Identify potential mitigation measures, such as firewalls, restricted access, or security agreements

Accurate documentation can reduce delays, objections, or required mitigation measures from CFIUS.

5. Coordinate with Legal and Compliance Teams

Export classification should be conducted in coordination with legal, compliance, and technical teams. Collaboration ensures:

• Classification determinations are technically and legally defensible
• Potential licensing needs are addressed proactively
• Confidentiality and national security considerations are properly managed

Early coordination helps identify potential roadblocks and supports a timely and compliant CFIUS filing.

Conclusion

Export classification is a critical preparatory step in advance of CFIUS filings. By identifying controlled technologies, determining ECCNs, assessing licensing requirements, documenting technology transfers, and coordinating internally, companies can minimize compliance risks and streamline the review process.

Proper export classification not only ensures adherence to U.S. export control laws but also facilitates a smoother CFIUS review by providing clear information on sensitive technologies and foreign investor access. Companies that prioritize classification early are better positioned to navigate national security reviews, maintain operational integrity, and complete transactions successfully.