Lawyer: Exporters Should Weigh Impact of New BIS Licensing Transparency Law

The report, which is intended to aid congressional oversight of the export licensing process at the Bureau of Industry and Security, means companies mentioned in the document could receive more attention from lawmakers, said Luciano Racco, co-chair of Foley Hoag's international trade and national security practice. That increased attention could trigger congressional inquiries or investigations into the activities of specific companies included in the document, he said.

“I don't want people to think that that means that every export license applicant needs to hire a team of lobbyists before submitting a license application that would involve a covered entity,” Racco said. “But I think certainly company management should be aware of applications that could raise interest or concern from policymakers in Congress and decide whether that potential additional scrutiny is worth the economic benefit of the transaction.”

While the report is exempt from public disclosure requirements, potential leaks could be another concern, he said. If a leak occurred, “there would be some opportunity to pursue litigation, but the damage at that point has already been done from a reputational standpoint.”

Each report must contain information about certain license applications for the previous year, including the names of the applicant and recipient, a description of the item, the value of the sale, and whether BIS approved the license. It won't contain every application -- only those whose recipient is in a U.S. arms-embargoed country, such as China, and also on BIS’s Entity List or Military End-User List.

The report is required by the Maintaining American Superiority by Improving Export Control Transparency Act, which President Donald Trump signed into law Aug. 19 (see 2508190036). The first submission to the Senate Banking Committee and the House Foreign Affairs Committee is due in August 2026.

Congress passed the law amid concerns that BIS was approving too many licenses to export advanced technology to China. A report that the House Foreign Affairs Committee released in December 2023 said BIS approves most requests to transfer controlled dual-use technology to Chinese companies, even those on the Entity List, despite the likelihood that those companies would break their commitments not to share that technology with China’s defense sector (see 2312070058).

Racco said he believes the new BIS report could pressure the bureau to increase its scrutiny of applications covered by the law and conduct more end-use checks and enforcement activity. That, in turn, could lead the agency to seek more funding from Congress.

“You can expect increased processing time for applications that will need to be included in the annual report,” Racco said. BIS, which "is chronically understaffed and, more recently, undergoing significant personnel turnover, would likely use any congressional scrutiny over its activities to ask for more resources. That could help reduce license application processing times in the long run, but it could also result in increased enforcement activity and risks for exporters. It will just be more BIS enforcement personnel looking at all of these transactions or potential transactions.”

The new law has received little attention so far, and many exporters may be unaware of it. But as exporters find out about it, Racco said, he expects concerns to grow.

“I certainly would raise it with any client seeking an application that would be covered by the act,” he said. “I would mention it to the client, and they would have to factor that into their business decisions about whether to move forward or not” with the application.