BIS to Issue Guidance on Expanded Licensing Requirements for Exports to China, Commerce Official Says

The Commerce Department Bureau of Industry and Security is working on guidance to help industry comply with the expanded licensing requirements for exports to China announced earlier this week (see 2004270027). The guidance will address new restrictions on exports intended for military users and uses, said Matt Borman, Commerce deputy assistant secretary for export administration. The rule expands the definition for military end-use and will cover military end-users in China, placing more of a compliance burden on industry.

Borman said BIS has already received questions from industry as companies try to better understand their due diligence obligations in vetting Chinese companies that do both commercial and military work. “That's certainly something we're mindful of, that we need to provide clarity on,” Borman said during an April 28 Sensors and Instrumentation Technical Advisory Committee meeting. Borman asked the TAC and “individual companies” to reach out with suggestions and questions.

Borman said BIS is also looking for industry feedback on its decision to eliminate its license exception for civil end-users (see 2004270026), which may have a disproportionate effect on deemed exports: releases of controlled technology to foreign people in the U.S. Borman said the agency wants to block technology from being transferred “via deemed exports to parties in China,” but also said it is “very mindful of the positive contributions many foreign nationals make to our development, innovation, and leadership” in those technologies. “I think, frankly, the biggest potential impact of removing CIV will be on deemed exports rather than on actual exports,” Borman said. “That's something we're certainly looking at. The more input we can get from industry on the impact, the more helpful that will be to help frame how we look at this.”

During the meeting, Borman also said BIS has almost cleared its long-awaited advance notice of proposed rulemaking for foundational technologies and is preparing to release it for interagency review. “I think we’re pretty close to having that at least cleared out of the bureau level,” Borman said. The document still needs to be cleared by the Commerce Department and other agencies, so its public release is “probably some weeks out,” Borman said. BIS originally planned to release the ANPRM last year, and the first export control on foundational technology is not expected soon (see 2002210026).

BIS has “not yet had a chance to look” at the comments submitted by industry for BIS’s January rule to restrict exports of certain artificial intelligence software (see 2001030024), Borman added. Commenters criticized the rule for unclear definitions, and industry said the control is causing widespread confusion (see 2004230034). Borman said he is unsure whether BIS will clarify the rule or issue guidance, but said he will speak with other Commerce officials “to get a sense from them as to whether they think any additional action is needed.”