By Elisabeth Bernabe
International conflict manifests in different forms. When one thinks of war, naturally they think of armed assaults conducted through the deployment of destructive weapons. Additionally, conflict can be unleashed online vis-à-vis harmful cyberattacks and foreign vigilante hackers. However, conflict largely manifests through the chess game of international trade. Countries can sanction rivalrous nations for untoward domestic regulations. States can place retaliatory tariffs on competing products exported by other countries and on industries. And, importantly, governments can monitor and regulate foreign investment.
In the United States, the Committee on Foreign Investment in the United States (“CFIUS”) is tasked with this job. Relatedly, in February 2022, the Biden administration expanded the critical and emerging technologies list (“CET”) which serves “to inform national security-related activities.” U.S agencies including CFIUS largely rely on this list to determine what industries are to be protected, and the list also informs agencies on how to “develop U.S. Government measures that respond to threats against U.S. security.”
As a brief background, “CFIUS is an interagency committee authorized to review certain transactions involving foreign investment in the United States and certain real estate transactions by foreign persons, in order to determine the effect of such transactions on the national security of the United States.” Through the Exon-Florio Amendment to the Defense Production Act of 1950, later amended by the Foreign Investment and National Security Act (“FINSA”) and the Foreign Investment Risk Review Modernization Act of 2018 (“FIRRMA”), CFIUS maintains the authority to review the potential national security effects of any transaction that could result in foreign control of any U.S. business. Importantly, CFIUS maintains the power to review certain “covered investments,” defined as an investment in which:
(1) a foreign person invests in a US business that is involved in critical [t]echnology, critical [i]nfrastructure, or sensitive personal [d]ata . . . and
(2) the foreign person acquires at least one of the following rights: access to material nonpublic technical information, board membership or observer rights, or any involvement in substantive decision making of the TID US business regarding critical technology, critical infrastructure, or sensitive personal data.
Essentially this means that if a foreign investor seeks to invest in a critical technology, such a transaction may trigger a “mandatory filing” to CFIUS.
Furthermore, FIRRMA does not wholly define critical technology, but rather describes examples of what critical technology would be vis-à-vis export controls lists and regimes like International Traffic in Arms Regulations (“ITAR”) and the Commerce Control List (“CCL”). FIRRMA also explains that emerging and foundational technologies are included under covered investments. Because of the ambiguity, publications such as the Critical and Emerging Technologies List Update updated by the Biden administration are largely helpful for “[d]epartments and agencies [to] consult . . . when protect[ing] sensitive technology from misappropriation and misuse.”
The February 2022 update to the CET will be extremely important for foreign investors as it sheds light on what the Biden administration and defense agencies deem important to U.S. national security. The updated list was amended by: 1) decreasing the amount of “technology areas” that are monitored; 2) refining and changing the names of several “technology areas”; and 3) expanding the original CET list by identifying additional “subfields” under each technology area with a focus on core technologies rather than on technology application areas or performance characteristics.
The inclusion of subfields will be crucial for foreign investors to monitor because such an addition will trigger the mandatory filing requirement in some cases. Though seemingly inconsequential—the update decreased the amount of technology areas considered critical— the identification of certain subfields will have an impact on international trade and investment. True, the technology areas decreased from 20 areas in October 2020 to 19 areas in 2022, but the identification of around 100 subfields significantly expands the CET list.
Thus, the question arises: how do states strike a balance between the ideals of trade openness whilst also protecting technologies they deem important to their economies? Specifically, the CET Update serves as a key insight into those technologies and industries the U.S. values, wishes to remain competitive in, and seeks to protect.
However, every action has an equal and opposite reaction, and such an expansion of the CET list could anger foreign investors and key industry players abroad. For instance, foreign investors could retaliate by avoiding investing in the U.S. altogether. If the filing process become too onerous, then investors may avoid the process completely and take their investments elsewhere. Additionally, foreign investors could approach their respective governments in order to counter the U.S.’s actions thus making it harder for U.S. businesses to operate abroad in those international markets.
Certainly, national security and the need to remain competitive players in the tech market drive this update. However, government officials should be wary of being overexpansive when listing critical technologies. Rather, a balance must be struck between safeguarding the U.S. tech industry while also allowing foreign investors to be participants in the U.S. market.
 The Committee on Foreign Investment in the United States (CFIUS), U.S. Dep’t of Treasury (last visited Mar. 8, 2022), https://home.treasury.gov/policy-issues/international/the-committee-on-foreign-investment-in-the-united-states-cfius.
 Fast Track Action Subcomm. on Critical and Emerging Tech. of the Nat’l Sci. and Tech. Council, Critical and Emerging Technologies List Update (2022), https://www.whitehouse.gov/wp-content/uploads/2022/02/02-2022-Critical-and-Emerging-Technologies-List-Update.pdf [hereinafter CET 2022 Update].
 Id. at 1.
 U.S. Dep’t of Treasury, supra note 1 at 1.
 Defense Production Act § 721, 50 U.S.C. § 4565 (1950).
 Foreign Investment and National Security Act of 2007, Pub. L. No. 110-49, 121 Stat. 246 et seq.
 Foreign Investment Risk Review Modernization Act of 2018, 115 H.R. 5515-538.
 CFIUS Frequently Asked Questions, U.S. Dep’t of Treasury (last visited Mar. 8, 2022), https://home.treasury.gov/policy-issues/international/the-committee-on-foreign-investment-in-the-united-states-cfius/cfius-frequently-asked-questions#:~:text=Yes.,%C2%A7%20800.401.
 Foreign Investment Risk Review Modernization Act of 2018, 115 H.R. 5515-538, at § 1703.
 CET 2022 Update, supra note 2, at 1.
 It is important to note that several defense agencies are members of the subcommittee that published this list, including the Department of Defense, the National Security Agency, and the Department of Homeland Security. CET 2022 Update, supra note 2, at i.
 Compare The White House, National Strategy for Critical and Emerging Technologies (2020), https://nps.edu/documents/115559645/121916825/2020+Dist+A+EOPOTUS+National+Strategy+for+Critical+%26+Emerging+Tech+Oct+2020.pdf/1543be15-a2ae-3629-7a45-aabdecaedb84?t=1602805142602, with CET 2022 Update, supra note 2.
 The White House, supra note 14, at A-1.
 CET 2022 Update, supra note 2.
 For instance, parties to transactions are required to provide extensive sensitive personal data during the filing process. Foreign Investment Risk Review Modernization Act of 2018, 115 H.R. 5515-538, at § 1703. Additionally, parties are subjected to tight timelines for reviews and investigation periods. U.S. Dep’t of Treasury, supra note 8.