BIS Preparing to Expand US Persons Controls Involving Foreign Military, Intelligence Activities
The Bureau of Industry and Security is preparing to publish a proposed rule that would expand the agency’s restrictions on certain activities that support foreign military, security or intelligence services. The rule, expected next week, would implement a provision in the FY 2023 defense spending bill that one lawmaker hailed as the “largest expansion of presidential export control authority in several years” (see 2212210032).
The proposed rule, which could allow BIS to further limit the provision of certain sensitive services to foreign intelligence agencies, will implement an amendment to the Export Control Reform Act of 2018 that “essentially expands our authority for U.S. persons controls,” Matt Borman, the BIS deputy assistant secretary for export administration, said during a March 21 Regulations and Procedures Technical Advisory Committee meeting. Although ECRA “codified” the “long-standing U.S. persons controls,” Borman said those controls have been “limited."
“We have long requested that that be expanded to military or intelligence, and that was done,” Borman said. “That's one that will be coming out, I think, pretty soon. I think our goal is next week.”
The rule also will “further address concerns” about items subject to the Export Administration Regulations “being used to violate or abuse human rights,” Borman said. Both the human rights controls and the U.S. persons restrictions will include a comment period to make sure BIS gets them “calibrated appropriately," Borman said.
But “as a practical matter, I really don't expect that we're going to get a lot of license applications for U.S. persons who want to support adversary foreign militaries or intelligence services,” he said. At least one law firm warned that the change could lead to new end-use screening obligations for U.S. people and companies operating abroad (see 2301060034).
Borman also said the agency is still working to finalize its October rule that imposed new export controls on semiconductor-related items and activities destined to or involving China (see 2210070049). “We got a fairly robust set of public comments that we're working through,” he said. BIS is hoping to “get that out sometime probably in April.” Trade groups and technology firms have told BIS the new chip controls are among the most complex export regulatory provisions ever published and have caused significant uncertainty in the semiconductor industry (see 2302020034 and 2211010042).
BIS is also looking at ways to stop Chinese companies from evading the October restrictions, Borman said, including firms acquiring controlled technologies through rental agreements. The Financial Times reported this month that certain artificial intelligence surveillance firms are skirting the restrictions by using cloud providers and “rental arrangements with third parties.”
The agency likely won’t address the issue in the final version of the October chip control rule, but “that is something we are aware of and we need to address,” Borman said. “We just have to be constantly on the alert for that and then figure out how to address it, but address it in a way that is as effective as possible with as little collateral unintended consequences as possible.”