BIS Sees Surge in Completed End-Use Checks in China

The Bureau of Industry and Security has seen a recent spike in completed end-use checks in China after years of dormancy, which has allowed the agency to verify controlled items went to their intended destination, said Matthew Axelrod, top export enforcement official at BIS. Axelrod, speaking during a Senate Banking Committee hearing this week, said the agency has completed more than 90 checks in the last seven months, a stark turnaround from a government in China that hadn’t “scheduled a single end-use check for us in over two years.”

Axelrod attributed the change to a new policy announced in October that allows BIS to move companies from the Unverified List to the more restrictive Entity List if the agency is unable to conduct an end-use check on those entities within 60 days (see 2210070006). The agency in December said it was already noticing China being more receptive to U.S. end-use checks (see 2212060059).

In total, BIS conducted more than 1,100 end-use checks in over 50 countries last year “to prevent the transshipment and diversion of U.S. items in violation of our regulations,” Axelrod said in his written testimony. He also said the agency’s Office of Export Enforcement used the recently dispersed money in the emergency supplemental Ukraine-related funding, included as part of the FY 2023 government spending package (see 2212200025), to hire 16 new special agents and six intelligence analysts, as well as two export control officers, one each in Finland and Taiwan.

“By adding agents and analysts, it means that we're able to do more investigations, which down the road will lead to more penalties,” Axelrod said. “We can do more compliance checks, we can do more outreach to industry, we can do more nomination packages for the Entity List. It's been a very effective resource for us.”

Thea Kendler, BIS assistant secretary of export administration, said her office used the funding to increase scrutiny of Russia-related evasion of export controls. BIS has been able to “ramp up license reviews involving Russia,” review technologies that “Russia was trying to obtain that it needed for its military machine” and “step up data analysis of trends in procurement and transshipment.”

She also said BIS has increased “international cooperation and education on the Russia threat and Russia's procurement practices and how we could address those” with allies. The funding was “very valuable to us,” Kendler said, adding that she also supports the Biden administration's FY 2024 budget proposal, which asks for an 11% funding increase for BIS (see 2303090061).

“We can always do more with more,” she said.