BIS Willing to Speed Up Emerging, Foundational Tech Effort: Top Official

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 (USCESRC), which published a report in June saying the Commerce Department “failed” to carry out its export control responsibilities over emerging and foundational technologies. Though Pelter suggested some of the criticism was justified, he deflected suggestions that BIS should consider abandoning some of its multilateral efforts and instead impose unilateral controls to speed the process.

BIS won't back down from the idea that “controlling these technologies through the multilateral regimes is the best way to do it,” said Pelter. If a 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,” he said.

BIS officials have made similar comments for more than 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. But the well-intentioned strategy caused too many delays in implementing the 2018 Export Control Reform Act, said some commissioners. BIS has published about 40 emerging technology controls, it but hasn't imposed restrictions on any foundational technology, despite issuing an advance notice of proposed rulemaking in August 2020.

How many years should Congress need to wait for action on foundational technology “for the sake of BIS finding the multilateral system sufficiently accommodating?” asked Commissioner Derek Scissors, 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 House Speaker Nancy Pelosi, D-Calif., said BIS’ multilateral strategy has been “exceptionally slow.”

Pelter declined to give 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 criticism that BIS hasn’t done enough to prevent sensitive technology exports to China, citing the various entity list additions the agency has announced over the past several years. “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 said 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. It's a blinking bright light on my radar, and we are working to get there.”

BIS is “preparing proposals” for foundational technologies at multilateral export control regimes, including the Wassenaar Arrangement. Pelter said. Those efforts were delayed when the COVID-19 pandemic forced several regimes, including Wassenaar, to cancel their 2020 activities. 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. He cited the recently formed European Union-U.S. Trade and Technology Council, whose first export control working group meets this month.

The pandemic also delayed some activities within BIS, Pelter said, impeding the agency's 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.

BIS end-use checks have also been hampered due to pandemic-induced 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.”