BIS Nominee Says He Would Review New AI Chip Controls, Agency Funding
Jeffrey Kessler, President Donald Trump’s choice to lead the Bureau of Industry and Security (see 2502040059), said at his Senate nomination hearing Feb. 27 that he has reservations about the agency’s latest export controls on advanced artificial intelligence chips and wants to scrutinize them. He also testified that he plans to examine whether BIS needs more resources and a reorganization.
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The Washington trade lawyer told the Senate Banking Committee he “generally” supports using export controls to deny China access to advanced AI chips, and he believes the AI diffusion rule, published days before the end of the Biden administration, “was intended to address a real problem.” But he suggested the rule may be flawed.
“I’m not sure that this rule was done thoughtfully, was done as well as it could have been,” he said. “It’s a very complex and bureaucratic rule, so that’s one of the things that I would like to review. The identification of the problem was largely correct, but I’m not sure that this is the right solution.” U.S. industry groups and European Union officials have criticized the rule, saying it could hinder advances in AI (see 2501130026 2502110074).
If confirmed, Kessler said he also would review whether BIS should get more resources, especially in enforcement. Allegations that China’s Huawei may have skirted U.S. export controls by obtaining chips from Taiwan Semiconductor Manufacturing Company are a “huge concern” and underscore the need for strong enforcement, Kessler said. BIS is reportedly investigating the TSMC-Huawei matter (see 2501150040).
“I’m concerned, especially on the enforcement side, that the resources aren’t at the level they need to be at,” said Kessler, who was assistant secretary of commerce for enforcement and compliance in the first Trump administration. “We need muscular enforcement of these rules to make them effective. Right now, it’s something like 150 or 200 people in export enforcement who are responsible for enforcing these rules around the world, and I question whether a ratio of one person to one country is adequate.”
Kessler would balance strong enforcement with the need to "avoid unduly burdening or penalizing American companies and workers with overly complex rules." He considers working with U.S. allies and partners "an important element of effective export controls."
Kessler would study whether BIS is properly organized to keep sensitive items out of the hands of U.S. “adversaries,” including China. “On day one, I’m going to review with the staff the whole structure of the organization, the decision-making processes, to make sure that the agency is built to meet that challenge,” he said.
Kessler said BIS should be “as nimble as our adversaries to keep pace with them. Our adversaries are sophisticated and they work hard every day to get around export controls and other rules that America has to prevent them from getting sensitive technologies, and we need to keep up.”
Under questioning from Sen. Chris Van Hollen, D-Md., Kessler avoided saying whether he would retain export controls the U.S. imposed after Russia’s February 2022 invasion of Ukraine. Kessler said his job would be to ensure export controls support U.S. foreign policy and national security objectives and that it would be up to others to set those goals. Senate Banking ranking member Elizabeth Warren, D-Mass., has said she's concerned Trump might ease restrictions on Russia to entice Moscow to end the war (see 2502240037).
Kessler was joined at the hearing by nominees for consumer, economic and housing positions. Warren said that due to time constraints at the event, she plans to provide “many” written questions for the nominees. Committee Chairman Tim Scott, R-S.C., said he’s giving senators until noon Feb. 28 to submit questions and nominees until noon March 3 to answer them.