BIS Conducting 'In-Depth' Review of China-Related Export Controls, Entity Listings, Undersecretary Says

The Bureau of Industry and Security has begun a broad review of new export controls on surveillance technologies going to China, which may also include additions to the agency’s Entity List, Acting Commerce Undersecretary for Industry and Security Cordell Hull said. Hull called the review “comprehensive” and “in-depth,” saying it could lead to controls over advanced surveillance tools, artificial intelligence software and biometric technologies.

The effort has so far included a business advisory for companies with supply chains in China’s Xinjiang region (see 2007010040) and a request for industry feedback issued earlier this month on the impact of controls on facial recognition software and other surveillance technology (see 2007160021). “We have put the business community on notice,” Hull said during a July 22 hearing held by the U.S. Commission on International Religious Freedom. BIS’ review comes as the Trump administration and Congress seek to pressure Chinese officials and companies for human rights violations against Muslim minority groups (see 2007200026 and 2007090024).

Hull said BIS is pleased with the impact of its export control regime, adding that the restrictions have hurt China’s ability to source sensitive U.S technologies. “We believe it's working. We believe our entity listings have impacted millions of dollars of items going to these entities,” Hull said. “But of course, the follow-up point is: We could of course do more.”

Hull said the agency is examining both item-based controls and end-use-based controls, similar to a June regulatory change that imposed more due diligence requirements on exports for military end-uses in China, Russia and Venezuela (see 2007090075). Congress’ passage of the 2018 Export Control Reform Act has been a big help in allowing the agency to enforce dual-use exports, he added. “Congress has very widely opened the aperture for us,” Hull said.

He also asked for enforcement leads from the commission, Congress and industry, saying BIS is looking for companies involved in Xinjiang supply chains. “To the extent you have information that particular entities are involved, please send it. We're happy to take a look at it,” Hull said. “We're happy to use the resources of the US government to drill down and try and get to the bottom of it.”

Although the administration issued a July 1 business advisory warning industry of sanctions exposure and export control risks for doing business in Xinjiang, some commissioners said U.S. companies may be avoiding due diligence to keep their business relationships alive. “I'm concerned that some U.S. companies are following the approach of ignorance is bliss,” said USCIRF Commissioner Gary Bauer, who is also president of the think tank American Values. “They don't ask a lot of questions, so they don't find out information that might require them to make, from their profit standpoint, difficult decisions.”

Hull said he is “not aware of any U.S. company fully understanding their products are going to oppress religious minorities,” adding that there are too many public databases, screening lists and government outreach efforts for companies to claim ignorance. “I struggle to believe that companies would knowingly engage in this,” he said. “Companies can't hide their head in the sand. These [Chinese] companies are out there. They’re published in the Federal Register.”

He also said BIS’s “is-informed” letters have proven helpful. The letters notify companies that their exports may be violating agency controls. “It essentially says, ‘Dear Company, you are now informed we believe your products are going for nefarious uses,’” Hull said. “That's been an effective tool.”

Several commissioners also asked BIS and the Commerce Department to do more to convince allies to pressure China. Hull called that a “delicate” topic. “I’m not aware of any other government in the world, frankly, imposing export controls for the persecution in Xinjiang,” he said. The U.S. is, however, working to persuade the European Union, the United Kingdom, Australia, Japan and others “to follow our lead,” Hull said. “It's just about convincing them that we should be in this together.”