Tech Groups Pushing BIS to Expand Standards-Setting-Bodies Exemption

The Bureau of Industry and Security should establish a blanket exemption for U.S. people and companies to participate in standards-setting bodies that have members designated on the Entity List, industry officials said. Though BIS has been working on a final rule that would clarify how export restrictions apply to the release of controlled technology at standards-setting organizations, tech-sector officials said they're unsure how the rule’s final language will read and are concerned some of the agency’s restrictions, which they view as unnecessary, may continue.

“Fundamentally, standardization is best served when it is open and participatory and global in nature,” said Jason Matusow, Microsoft's manager-international standards, during the Commerce Department’s Sept. 14 Regulations and Procedures Technical Advisory Committee meeting: “That's been a real problem for U.S. industry.”

Commerce amended the Export Administration Regulations last year to allow U.S. companies to more easily participate in standards-setting bodies in which Huawei is a member. The rule effectively permitted the release of certain technology to Huawei and its affiliates on the Entity List if that release is in the context of a standards-setting body and not for commercial purposes. Although the rule was applauded by industry, they also urged the administration to expand the rule to exempt all businesses on the Entity List, or otherwise risk hampering U.S. companies from participating in standards bodies, which could further cede technology leadership to China.

More than a year has passed, and some of those concerns have become reality, industry officials said. Matusow said “a number” of U.S. firms have withdrawn from standards bodies because they fear violating U.S. export control laws. He also said many projects involving standards settings have been delayed, “which has resulted in time-to-market slowdowns for commercial products, but also outright suspensions of organizations as a whole while they waited for clarity.” Some standards bodies even relocated from the U.S. to Europe to avoid violating BIS restrictions, Matusow added.

Matusow said the “fear” among companies of violating export controls at standards bodies started with BIS’s 2020 exemption for Huawei. “It sort of opened Pandora's box,” he said, noting it caused companies to question all their activities at standards bodies.

“The reality is standardization is fundamentally a process by which organizations come to participate with intent for materials to be public,” Matusow said. “You simply don't come to the table with an intent to take something that is inherently controlled or even commercially secret and share it in the standardization process. That is antithetical to standardization itself.”

Matusow, who was speaking on behalf of the Telecommunications Industry Association, the American National Standards Institute, the Information Technology Industry Council and others, said the groups spoke with BIS about how to best word a final rule to address these issues. Mary Saunders, American National Standards Institute vice president-government relations and public policy, said those discussions have been ongoing for two years.

“After two years, the harms that industry warned of have now become evident,” Matusow said. He said industry is most concerned with the “rapid acceleration of new Chinese standards organizations” that are “duplicating U.S.-based standardization work and driving a wedge in the U.S. industry's competitiveness on a global basis.”

A Commerce spokesperson said Wednesday the agency "continually evaluates its export controls to protect U.S. national security and foreign policy interests, including technology leadership in international standards development," and is working with allies on these issues. The spokesperson declined to say whether the agency is close to issuing a final rule that would expand its 2020 exemption but said it hasn't issued penalties against companies or other parties "in connection with standards development."

Some in industry said they feel BIS’s concerns about export control risks at standards bodies are unfounded. Naomi Wilson, ITI vice president-Asia policy, said during the meeting that companies don’t seek to disclose sensitive and controlled technologies at these bodies. “We feel that that was a misinterpretation of what goes on in the standards development context, in that it is inherently open,” Wilson said. “Companies will only divulge information where there is an interest of ultimately making that information and the standard public, which should preclude any concerns with export controls.”

Wilson said industry’s confusion about how export controls intersect with standards development has “effectively forced them to cede their seats to Chinese counterparts and other competitors,” which ultimately is counter to the administration’s policy of strategic competition with China. “This is really antithetical to the U.S. policy concerns about competitiveness with China,” Wilson said.

Clete Johnson, a lawyer for the RAN Policy Coalition, said the exemption won’t benefit Entity List companies -- only U.S. firms. “This is not about giving Entity List companies an exemption,” he said. “It's about giving American and allied companies and their engineers the ability to lead technological development without having to become an export controls lawyer to determine what type of conversation they can have.”