BIS Can Look to Speed Up Emerging, Foundational Tech Effort, Acting Undersecretary Says
The Commerce Department's Bureau of Industry and Security is willing to consider ways to accelerate its emerging and foundational technology control effort but won't abandon its multilateral efforts just to publish controls more quickly, a top official told a bipartisan congressional commission on China Wednesday. Acting BIS Undersecretary Jeremy Pelter acknowledged criticism that the agency is moving too slowly on the congressionally mandated export control effort but defended the work BIS has done so far and said the agency doesn’t plan to change course.
“I take your criticism to heart,” Pelter told the U.S.-China Economic and Security Review Commission, which in June published a report saying the Commerce Department has “failed” to carry out its export control responsibilities over emerging and foundational technologies (see 2106020024). Although Pelter suggested some criticism was justified, he deflected suggestions that BIS should consider abandoning some of its multilateral efforts and instead impose unilateral controls to speed up the process.
“I will not back down from the idea that I think controlling these technologies through the multilateral regimes is the best way to do it,” he said. “If [the technology] is widely available, and we're simply doing a unilateral control, [China] will get the technology from elsewhere, our industry will be harmed, and we will have gained nothing.”
BIS officials have made similar comments for over a year, repeatedly saying they will prioritize multilateral controls to avoid restricting exports of technologies that are available in competitor countries, which would harm U.S. exporters (see 1911070014). But the strategy, while well-intentioned, has caused too many delays in implementing the Export Control Reform Act, which was passed in 2018, some commissioners said. BIS has published around 40 emerging technology controls but has yet to publish a restriction on a foundational technology, despite issuing an advance notice of proposed rulemaking in August 2020 (see 2008260045).
“How many years should Congress have to wait for action on foundational technology for the sake of BIS finding the multilateral system sufficiently accommodating?” said commissioner Derek Scissors, who is also a China economics expert with the right-leaning American Enterprise Institute. “It's been three years, and we've done almost nothing. Are we looking at three more years for action on foundational technology as mandated by ECRA? Two years? What’s the metric here?” Commissioner Michael Wessel, appointed to the USCESRC by Nancy Pelosi, D-Calif., said BIS’s multilateral strategy has been “exceptionally slow.”
Pelter declined to provide a time frame and said he doesn’t think there’s a “specific, quantitative answer to how many technologies should be controlled at what pace.” He also objected to the notion that BIS hasn’t done enough to prevent sensitive technology exports to China, pointing to the various Entity List additions the agency has announced over the last several years as well as its recently created military and military intelligence end-user and end-use rules (see 2007090075 and 2102190042).
“I'm receptive to constructive criticism if folks think that we do need to step on the gas pedal harder,” Pelter said. “We can look and see if there are ways to do that.” Pelter added that BIS is prioritizing the controls and suggested the agency feels pressure to issue them. “I can tell you that we are working on it, and it is on my radar,” he said. “It's a blinking bright light on my radar, and we are working to get there.”
Pelter said BIS is “preparing proposals” for foundational technologies at multilateral export control regimes, including the Wassenaar Arrangement. Those efforts were delayed slightly because of the COVID-19 pandemic, which caused several regimes, including Wassenaar, to cancel their activities in 2020 (see 2106080055). But Pelter said BIS has also been working outside those multilateral groups on coordinated controls with trading partners. “When the regimes cannot achieve our objectives, we have been working on a plurilateral basis as well,” he said, pointing to the recently formed European Union-U.S. Trade and Technology Council, which is holding its first export control working group this month (see 2109020020).
The pandemic has also caused some delays within BIS, Pelter said, including with its efforts to implement ECRA. Before the pandemic, he said, a “lot of business” happened “in side conversations, in the hallway meetings, particularly in those face-to-face environments.” Losing those interactions to virtual meetings has been a "challenge," he said.
“It's a lot easier to work out your differences when you're sitting across the table, and then you can have small group or one-on-one conversations,” Pelter said. “We need to find more novel and unique ways to get our folks connected all the way up from the staff level to the assistant secretary level and above, and make sure those conversations are happening in a meaningful way.” He also said different government agencies could improve communication and information sharing, but didn’t single out specific departments. "We need to work to ensure that our data sets, our information, whether it's at the Department of Commerce or Defense, Energy or State, wherever it may be, is shared in the fullest and speediest way possible.”
BIS end-use checks have also been hampered because of the pandemic due to travel restrictions, Pelter said. He said the agency hasn’t considered slowing the pace of license approvals or denying more licenses to reduce the need to conduct end-use checks, but BIS may take a second look at an application if an end-use check would be difficult. “I think we could look at very specific entities where we've not been able to perform an end-use check on potentially the most sensitive items,” Pelter said. BIS would then work with the interagency to reassess whether they are “still comfortable with the license’s approval prior to an end-use check being conducted.”
Pelter also said U.S. efforts to more closely work with allies on export control efforts has been largely successful so far, particularly in Asia and Europe. He called the EU-U.S. Trade and Technology Council an “incredible amount of cooperation” and said “we’re going to continue to see” more allies protect their most sensitive technologies from being acquired by China.
BIS is focusing "on the technologies that are most critical, ones that [China] is moving after most aggressively,” Pelter said. The U.S. is especially focused on technologies where it and its partners “still have a significant leading edge, and that [China] is not a near peer of ours.”