Regulatory intelligence for US exporters

Commerce's Export Control on AI Software Causing Confusion, Industry Says

The Commerce Department’s unclear rollout of an export control on geospatial imagery software is causing industry confusion and could lead to broad, unintended impacts on exports of certain artificial intelligence, industry representatives said in interviews. If unchanged, the rule could severely impact a range of companies in the geospatial field, they said, creating the type of broad consequences Commerce officials hoped to avoid (see 1911070014).

“For these companies who now have to supply software without A.I., it's like supplying a human body without blood,” said Sanjay Kumar, CEO of the World Geospatial Industry Council. “It will make it impossible for some companies to continue doing business how they were before.”

The interim final rule, released in January (see 2001030024) was criticized by industry for unclear definitions that have made it difficult for some in the A.I. field to determine whether the rule applies to them. “That lack of definitions is creating, at best, confusion,” said Jennifer O’Bryan, chair of Commerce’s Sensors and Instrumentation Technical Advisory Committee. Some of the terms referenced in the rule, such as deep convolutional neural networks, rotational normalization and rotational patterns, “desperately need some sort of definition to make sure that they don't intrude on certain purely commercial technology spaces that use similar A.I. software,” said O’Bryan, who is also the government affairs director for SPIE, an international society for optics and photonics.

The rule’s broad language could apply “to software used across a range of manufacturing industries,” a U.S. manufacturing industry representative said. Aside from the unclear definitions, the technology is already widely available, said Ken Montgomery, vice president of trade regulations and compliance for the Computing Technology Industry Association. This could hurt U.S. competitiveness by forcing customers to simply purchase the technology elsewhere. “Industry, academia and governments worldwide are capable of building [this] type of software,” Montgomery said in an email, adding that the rule, as written, will place a “significant compliance burden” on industry. The Commerce Department Bureau of Industry and Security declined to comment.

Several industry representatives said they wish Commerce had issued the rule for public comment before it took effect, adding that industry expertise is critical for export controls that involve complex technologies. “To put out an interim rule or a draft rule and have it go into effect immediately before there's any period of public comment just seems incongruous with the principles that we grow up with in this democracy,” said Barbara Ryan, a policy adviser with the World Geospatial Industry Council.

One trade expert in the automotive industry said they were surprised the rule was not proposed for public comment, saying BIS officials normally prefer industry input before finalizing a control. BIS officials “are very frank about the fact that they're not technologists. They’re not on the front line of this advanced research and development and manufacturing. They don't really understand, when they're drafting these rules, what precisely they’re covering,” that person said. “So when you take away the ability of industry to weigh in and say, ‘Hey, I know you're thinking of it this way, but let us tell you some of the unintended consequences of doing that,’ you're going to undermine your own efforts.”

While Kumar said he “respects the U.S. government's sensitivity around this strategy,” he said he is concerned the rule’s unclear definitions are creating a “gray area” for WGIC members, who are not sure whether they fall under the control's parameters. “It's going to be a difficult scenario for global companies,” he said. “We'd like to have clarity.” Ryan said the rule seemed “rushed,” adding that it could have been more tailored toward the government's intended target. “It was so specifically written. You just keep saying to yourself, What's behind this? Who do they want to target?” Ryan said. “And wouldn't there have been a much better way to surgically go in and just isolate that one company, country or target rather than put something like this into place that affects everybody in this community?”

Montgomery said he has “heard that there may be several iterations of the rule,” but other industry representatives said they have not heard from BIS after submitting comments. O’Bryan said she thinks BIS’s intent was to keep the control “narrowly defined,” adding that the industry comments may spur the agency to issue guidance. “I think that would provide broader relief for the community,” she said.