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Biden Administration Moves to Regulate Automobile Information and Communication Tech from China

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The Commerce Department has published an Advance Notice of Proposed Rulemaking seeking comments on a proposal to restrict the use of information and communication technologies and services (ICTS) developed or supplied by foreign adversaries (e.g., China) in connected vehicles (CVs), an initiative that could impact virtually all auto makers and their suppliers selling into the US market. To inform its rulemaking, the Commerce Department’s Bureau of Industry and Security (BIS) has requested public comments by April 30, 2024.

BIS has initiated this rulemaking based on President Trump’s 2019 Executive Order 13873, “Securing the Information and Communications Technology and Services Supply Chain,” promulgated pursuant to the International Emergency Economic Powers Act (IEEPA). The ICTS Executive Order grants the Commerce Secretary broad authority to restrict or prohibit transactions involving ICTS (acquisition, importation, transfer, installation, dealing in, or use of ICTS by any US person) in which a foreign country or national has an interest.

BIS indicates that it is considering rules that would:

  • “prohibit certain ICTS transactions or classes of ICTS transactions by or with persons who design, develop, manufacture, or supply ICTS integral to CVs and are owned by, controlled by, or subject to the jurisdiction or direction of [China, Cuba, Russia, Iran, North Korea and Venezuela]”; and
  • “allow market participants to engage in otherwise prohibited transactions … if the undue or unacceptable risks of those ICTS transactions can be sufficiently mitigated using measures that are monitorable.”

To support its CV rulemaking, BIS identifies 35 detailed questions for which it is seeking input from the public. Many of the questions focus on understanding the ICTS supply chain (e.g., categories of hardware and software, market leaders and market share, location where data is stored or processed, relevance of aftermarket ICTS supplies), while other questions focus on the presence of Chinese firms in the ICTS supply chain and yet other questions seek information on security vulnerabilities presented by the ICTS supply chain. If BIS proceeds with this rulemaking, this would be the most substantial regulatory action under the ICTS Executive Order.

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Rod Hunter advises on international trade and investment policy and regulatory matters. He previously served as Special Assistant to the President for National Security Affairs and senior director for international economics at the National Security Council (NSC), the White House office that coordinates trade policy and supervises CFIUS. In that role, he managed CFIUS cases, including negotiating resolution of the most sensitive cases. A recognized expert in the field, he has testified before Congress during the legislative process leading to recent amendments to CFIUS’ authorizing legislation.

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Callie C. Lefevre is an associate in the Washington, DC office where she is a member of the International Practice Group. Her practice is focused on all aspects of International Trade law, particularly compliance with US export controls, trade and economic sanctions, and US foreign investment restrictions. Prior to joining Baker McKenzie, Callie worked as a student advocate for the New York University School of Law Environmental Law Clinic. While there, she participated in environmental litigation and advocacy pertaining to water quality and urban runoff under the supervision of attorneys at the Natural Resources Defense Council. Callie’s experience also includes working as a summer associate at Baker McKenzie in 2014, where she participated in all aspects of International Trade law, and working as a legal intern at the United Nations High Commissioner for Refugees in Beirut, Lebanon.

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