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BIS Drafting Foundational Tech Rules, Prioritizing Multilateral Controls, New BIS Official Says

In her first public remarks since joining the Bureau of Industry and Security, Thea Kendler said BIS has been constantly looking for new emerging technologies that should be subject to controls and is close to publishing its first foundational technology rule. Kendler, who was confirmed last month as assistant secretary for export administration, also said she plans to prioritize multilateral export controls that protect American technology from China’s military and wants to work closely with industry so those controls don’t harm U.S. competitiveness.

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Although BIS has announced emerging technology controls on about 40 technologies, the agency has been criticized by some lawmakers and a congressional panel for moving too slowly to issue new controls, which are required by the Export Control Reform Act of 2018 (see 2109080062, 2106020024 and 2010010020).

“As far as I'm concerned, we are constantly looking for emerging technologies,” Kendler said during a Jan. 28 conference hosted by the Massachusetts Export Center. “But I think we can do more. I'm not suggesting that we've done all that we can do.”

Kendler stressed that the agency will continue to prefer multilateral restrictions and regularly submit proposals at the Wassenaar Arrangement. She also said she wants to hear more from industry about innovative technologies BIS should be monitoring.

“Me sitting here in my office is not a great place to learn about emerging technology,” Kendler said. “I want to understand what's happening out in the labs and research facilities across the country to learn what the new developments are, and see what other parts of our government are working on so that we can cast a very wide net in looking for emerging technologies.”

BIS is also working on draft rules for foundational technologies, “at least one of which may be published relatively soon,” Kendler said. The agency hasn’t yet issued a foundational technology control despite issuing a prerule in 2020 that requested industry feedback on potential controls (see 2008260045). BIS officials have said the effort has proved very challenging (see 1911050052).

Kendler also touched on China, saying she will focus on tailoring export controls to prevent China’s military from acquiring sensitive American technologies. She also stressed that those controls should be imposed alongside trading partners so they don’t inadvertently hurt U.S. competitiveness. “We must make our export controls in a multilateral or plurilateral or bilateral system as much as possible,” Kendler said.

But she also said unilateral controls are sometimes necessary, pointing to the agency’s export restrictions on geospatial imagery software, which have been in place under a temporary Export Control Classification Number since 2020 (see 2201050027). BIS planned to propose the software for control at Wassenaar but was forced to delay the proposal because Wassenaar canceled its 2020 plenary and only held limited discussions during the 2021 cycle. Kendler said the temporary unilateral control is important because the U.S. is the “sole developer” of the software.

“This is an example where we needed to lead and act quickly to address national security and foreign policy concerns,” she said, adding BIS still plans to propose the software at Wassenaar. “Unilateral controls have a place in our system, but we know that they affect you and not your foreign competitors.”

Kendler also cautioned companies about doing business in China, especially if they don’t have complete information about their customers. Exporters who don’t conduct enough customer due-diligence risk violating export license requirements, BIS’ military end-use and end-user rule, Entity List restrictions and other controls.

“You have a responsibility to know who you're dealing with. And I would think, beyond your legal responsibility, that there's a reputational risk at issue as well,” Kendler said. “I don't think it makes sense to do business with anyone who you don't know, who you haven't figured out who you're dealing with.”

She offered the same advice to companies operating in Russia, many of whom may soon be subject to sweeping new trade restrictions if Russia further invades Ukraine (see 2201270049). “Know who you're dealing with, think about current events and think about the environment you're operating in,” Kendler said. “I don't think it's wise in the current environment to not be conducting significant due diligence.”