Regulatory intelligence for US exporters

Commerce Releasing Proposed Emerging Tech Controls in 'Next Few Weeks,' Top Commerce Official Says

The Commerce Department plans to release proposed export controls on emerging technologies within the “next few weeks” and an advance notice of proposed rulemaking on foundational technologies before the end of the year, a top Commerce official said. Matt Borman, the Commerce deputy assistant secretary for export administration, suggested Commerce has been eager to release both controls to ease concerns from U.S. trade groups and companies, which have warned the agency against overly broad, unilateral controls.

“I’ve heard this quite a bit -- some companies are starting to think about moving [research and development] offshore because they don't know what's going to come out,” Borman said, speaking during an Oct. 29 Sensors and Instrumentation Technical Advisory Committee meeting. “As we’ve said, these will be very specific. They will not be general categories.”

Borman also touched on a range of export-control related issues, including the state of the Bureau of Industry and Security after Nazak Nikakhtar stepped down from her role as acting undersecretary in August as she awaited Senate confirmation (see 1908290044). Borman said BIS is now reporting to Commerce’s Deputy Secretary Karen Dunn Kelley. “We’re trying to get her up to speed,” Borman said. He did not give more details.

Nikakhtar and other top Commerce officials, including Borman and Secretary Wilbur Ross, have said for months Commerce’s controls on emerging technologies and its ANPRM on foundational technologies would be released soon. In June, a top Commerce official said the foundational ANPRM would be released in “weeks, not months” (see 1906040038), and Borman said in July the foundational tech ANPRM would be issued in “weeks” (see 1906280057).

Borman said Commerce is now close to releasing both, with proposed controls on a set of emerging technologies expected before December. Commerce will also give industry a 60-day comment period for both the proposed controls on emerging technologies and the ANPRM on foundational technologies, Borman said. Commerce originally allowed 30 days for comments for its November ANPRM on emerging technologies before extending the period to 60 days after requests from industry. Commerce officials originally pushed back on a 60-day comment period for the foundational ANPRM (see 1907100044).

Borman also said the foundational ANPRM will be released this year, but because of the extended comment period, it will likely bleed into 2020. BIS is currently working on the ANPRM draft, Borman said, adding that it has been more “intellectually challenging” than emerging technology controls. While BIS officials have defined emerging technologies as technology that has not yet been commercially developed, they have said foundational technologies are items that are widely used but are not controlled -- a somewhat wider range of technologies that has challenged BIS officials, Borman said.

“So that’s why it has been a little more challenging intellectually to figure out how we even describe that in an advance notice of proposed rulemaking that the public could give us reasonable comments on,” he said.

Borman said the emerging technologies are “further along in the review process,” saying the controls will be narrowly aimed at “specific [Export Control Classification Number]-level descriptors” rather than broad categories, a common concern from U.S. and international companies. “We’re not looking to control [broad categories of] artificial intelligence or robotics or quantum computing,” Borman said. “I think some have the impression that’s what we’re going to do.”

Borman also stressed emerging technology controls will be an “ongoing undertaking” -- the upcoming set of controls will be followed by more sets. For this reason, he said, public comments on the next set of proposed controls will be “really important.”

“Of course the comments on the ANPRM were useful, but by definition they were general because the ANPRM was general,” Borman said. “But I think once we have specific proposed controlled technologies ... it'll be much easier for the relevant companies and research institutions to give us feedback.” Borman said Commerce will be looking for two main areas of feedback: whether the language is clear and whether the technologies are only available in the U.S. and in its allies, or whether they are available in countries in which Commerce might want to impose restrictions.

“That's going be a key issue here,” he said.

Borman also said Commerce has spoken with U.S. allies about multilateral controls on some of its upcoming controlled technologies -- a common concern from industries who have said that unilateral controls will only hamper U.S. competitiveness by pushing their customers to seek other buyers. BIS has mostly spoken with Japan about the controls, Borman said, but plans to “have some conversations with other governments as well.” Commerce’s goal is to speak with foreign partners before the controls take effect, Borman said. “Ideally, if we come up with proposed controls that we think warrant multilateral control, that's a way to build in some support within the regime before we get to the regime,” he said.

But Borman also said the process will be ongoing. “As we roll this out, we’ll be continuing to have discussions with some of the most relevant supplier governments that are like-minded on that effort so that we can try to ... do it on a level playing field,” he said.

Commerce plans to hold the first meeting of its Emerging Technology Technical Advisory Committee (see 1909060040) on Dec. 4 to receive in-person feedback from U.S. companies and industries, Borman said. Commerce has a “universe of candidates” that have received security clearances to sit on the committee, he added.

Borman also briefly touched on the Entity List, saying Commerce is actively searching to add more entries. “We’re always looking at potential parties to put on the Entity List,” Borman said. “So that’s something that has been ongoing and will continue to be ongoing.”

He acknowledged that the Entity List can be “challenging” for some U.S. companies because the list’s restrictions are unilateral, but was hopeful Europe may adopt restrictions on some of the U.S.’s latest additions, which targeted Chinese government agencies and technology companies for contributing to human rights violations (see 1910070076).

“The Europeans tend to be human-rights focused,” Borman said, “so it is possible that they will come up with roughly comparable controls.”

Borman did not attend a scheduled appearance at a panel later in the day hosted by the Center for Strategic and International Studies about forced technology transfers to China. Before introducing the panelists, James Lewis, director of CSIS's technology policy program, said Borman was called to an unexpected meeting with Secretary Ross. "Maybe that's good news," Lewis said.