Regulatory intelligence for US exporters

BIS to Propose First Set of Emerging Tech Controls in Six Areas, Including AI, Semiconductors, Official Says

The Commerce Department plans to release its first set of proposed controls on emerging technologies in six areas, including the semiconductor and artificial intelligence sectors, a top Commerce official said. The six proposed rules (see 1912130055), which may not be released until early next year, include restrictions on items in the fields of quantum technology, semiconductor design, chemicals, biotechnology, artificial intelligence and possibly 3D printing, said Matt Borman, Commerce’s deputy assistant secretary for export administration. The controls stem from an advance notice of proposed rulemaking published more than a year ago.

“We've got a set of these that I was hoping would actually be published by now, but I think we’re now realistically looking at early next year,” Borman said, speaking Dec. 13 at a Brussels export control forum hosted by the European Commission. BIS officials expected to issue the proposals earlier this year, but they have been slowed by a lengthy interagency review process and other delays (see 1911070014)

At least four of the technology areas that Borman said will be included in upcoming controls were mentioned in Commerce’s November 2018 rulemaking notice: quantum technologies, biotechnology, artificial intelligence and 3D printing (also known as additive manufacturing). Borman did not specify which aspects of those technology areas BIS is seeking to control, only urging industries and foreign governments to provide feedback once the proposed controls are published.

“I would really encourage everyone to look at those,” Borman said. “If your company or industry is affected, please give us your comments.” He said BIS wants to ensure the proposals are “clear” and determine whether they are the “right” controls.

Borman also said BIS plans to release its ANPRM for foundational technologies in “early January,” again stressing that the foundational effort has been more challenging (see 1911050052) than BIS’s effort to control emerging technologies. Work on both foundational and emerging technologies has been delayed despite the agency creating several interagency working groups to research the technologies and propose controls. “We optimistically called them ‘sprint groups,’” Borman said.

He also said Commerce is lagging behind proposing the controls to multilateral export regimes for next year, such as the Wassenaar Arrangement. Wassenaar recently released the outcomes of its 2019 export controls for dual-use goods (see 1912120011). “We’re a little bit behind that for 2020,” Borman said, “especially for Wassenaar.”

Borman was in Brussels as part of a collaborative export control dialogue with European Union member states to share export control lessons and experiences (see 1912100033). During the forum, he advocated for BIS’s various enforcement tools, including its arsenal of field agents and its ability to deny export privileges for illegal shipments and transfers. “I know folks may be thinking about changes to their export control authority,” he said. “It’s a very useful tool to have.”

Commerce has also recently increased the use of its “is informed” authority under the Export Administration Regulations, Borman said, suggesting it may be a useful tool for some EU countries. The authority allows BIS to block a specific sale if it impacts U.S. national security, even if the export is not on a U.S. control list. Borman said this has helped BIS block sales to countries with nuclear weapons programs. “I can literally send them a letter and tell them I’m now imposing a license requirement on that transaction,” Borman said. “That gives us a lot of immediate flexibility to deal with very immediate transactions.” While Borman said Commerce uses this authority sparingly, its usage has increased lately, including in one recent case involving a “very advanced” artificial intelligence export to a country of concern. “We have been using that tool more,” Borman said. “We’re fortunate to have very robust enforcement authority.”

Borman said he hopes the U.S. can achieve two goals in export control discussions with the EU: how to better identify emerging technologies and how to ensure there is even implementation of export controls across partner countries. Borman said Commerce wants to create “an innovation-friendly tech transfer environment among like-minded countries.” He advocated for the sharing of licensing data, export data and information on entities and countries of concern. “There is just a whole range of things that I think ultimately will better get us to the goal of a secure tech-transfer zone,” Borman said.

He also disagreed with the premise that export controls on emerging technologies -- as the U.S. remains locked in a trade war with China -- are turning political. “I don't think of it as political,” he said. “It's really based on the activities of individual entities and countries that we’re concerned with.” He also said more engagement is needed from technology experts. For the controls to succeed, Borman said, they need to be “technically based,” advocating for “even more technical expertise” in multilateral export control bodies. “I think that's the best way to make sure the companies, the research institutions that want to comply, can comply,” he said. “I think engaging the research community is even more important now than it has been in the past.”

Stephane Chardon, the European Commission’s coordinator for export control, said during the forum that the EU needs more “cooperative multilateral and plurilateral approaches” across export regimes. He also said the EU needs to improve its enforcement capabilities, as recently suggested by a Swedish think tank (see 1912060024). “If we join forces, if we go through the path of cooperation,” Chardon said, “we’ll have more convergent, more aligned and more effective controls.”