Commerce 'Dedicated' to Building New Export Control Regime, Head of BIS Says

Estevez, speaking during a May 25 event hosted by the Atlantic Council, said the U.S. needs to take advantage of the highly coordinated Russian sanctions coalition to build a new export control forum. “We need to take those partnerships that we've just solidified, those 37 nations and whoever else wants to join that club, and build what I call the new export regime, the digital export regime for the 21st century,” Estevez said. Others have also called for a new regime, saying it should include a range of technology-producing nations that share democratic values to address the modern technology proliferation issues that the existing regimes cannot (see 2205240039).

The new regime should specifically “protect our technology and the technology of our allies from going into China's civil-military fusion,” Estevez said, and “stop them from using our technology against us.” He called it his “top priority” in the long term. “That's what I intend to do with Commerce,” Estevez said, “and we are dedicated to that.”

The regime could help coordinate export controls among the U.S. and its allies if China decides to invade Taiwan, similar to Russia’s invasion of Ukraine. Estevez said China is “obviously” looking at the international sanctions response to Russia and “figuring out what their playbook is against that.”

“We need to stay two steps ahead of them, and we need to do that with each other,” Estevez said. “The way to do that is to have good trust across the globe.”

He also said some of the responsibility will fall on industry, adding that U.S. and foreign companies need to be “assessing their risk calculus based on what's going around in the world today.” Although Estevez said pulling out of Russia’s business environment is “much easier than the Chinese scenario,” companies should have a plan in place for doing so.

“The reality is, they need to look and say, ‘these are people who do not respect the law,’” Estevez said, specifically referencing cases of Chinese stealing American intellectual property. “And if you don't start figuring out how you're going to diversify and what you can afford to lose and how you're going to manage your business, you're putting yourself at a disadvantage over the long term.”

BIS is diligently monitoring whether China is backfilling U.S. export restrictions against Russia, Estevez added, and said any violators could be placed “on the bad-boy list immediately.” The agency is also continuing to identify emerging and foundational technologies for potential export controls, Estevez said, and pointed to several key technology sectors where the agency is looking, including artificial intelligence, machine learning, biotechnology and hypersonics.

He said the agency has received “a lot of criticism for not getting some work out there, even though there's been a lot of work done.” BIS has implemented nearly 40 emerging technology restrictions but hasn’t yet issued a foundational technology restriction. The agency recently proposed new unilateral controls for items that could be considered foundational technologies, but said it doesn’t plan to differentiate between the two technology categories going forward (see 2205200017).

Lawmakers have threatened to take away BIS’s authority under the Export Control Reform Act, citing its lack of progress over the controls (see 2010010020 and 2110250035). “People are seeing a duck going across the water looking like it's not really working when it's paddling away underneath,” Estevez said. “And that's what we're doing.”

The agency needs more “specifics” before it can propose additional controls, Estevez said. BIS has asked industry and academia for more help to identify potential technologies for control, but officials have said many of the suggestions have been too broad (see 2204080033).

“I can't [just] say A.I.,” Estevez said. “A.I. is amorphous, right?” But “A.I. for predictive maintenance on a fighter jet? Now we're talking.”

“I need industry to explain to me the impacts and where they're going, and we'll work with them on that,” he added. “And I need universities, think tanks, the whole good-idea world to bring this.”

Estevez also suggested he would support an outbound investment mechanism, which could be included in the final version of Congress’ China competition bill (see 2202030062). An outbound screening tool also has support from Commerce Secretary Gina Raimondo (see 2205130036).

“One thing that we do not want is American capital funding Chinese military capability,” Estevez said. Earlier in the event, he urged lawmakers to pass the broader China package and its incentives for the semiconductor industry, which he called a “national security imperative.”

Estevez also said he is still working to familiarize himself with the government’s various blocked parties lists, in part to explain to “the layperson” why the government has so many lists, but also to understand the different legal standards for adding to each one. “I know I can get sued when I put someone on the list,” he said. “And when I put someone on the list, I intend to win the lawsuit that's going to follow.”