Former BIS Official Expecting New US Person Controls This Year

Companies should expect the Bureau of Industry and Security to announce new export controls this year restricting certain U.S. person activities involving military and military intelligence end uses and end users, a former BIS official said.

BIS for months has been working on the controls, which are expected to implement a provision in the FY 2023 defense spending bill designed to allow the agency to expand its U.S. persons controls to capture certain sensitive services to foreign intelligence agencies (see 2212210032, 2301060034 and 2309120023). A BIS official last year said the agency hoped to publish the controls in 2023 (see 2303210037).

Kevin Wolf, a former assistant secretary for export administration with BIS before leaving in 2017 and now an Akin Gump lawyer, said he’s expecting controls to be published “at some point in 2024.”

Wolf, speaking during a Jan. 25 during a virtual conference hosted by the Massachusetts Export Center, added: “I don't know what's in them. I don't think anybody does.” But he also noted that Congress included the provision in the National Defense Authorization Act with a “human rights focus” in mind.

“So U.S. person support for an intelligence agency of concern on how to set up the systems to monitor journalists and dissidents, for example -- that activity might be controlled,” Wolf said. “And I suspect there's a lot of discussion about how to align between the BIS definition here and the State Department's definition of defense services.”

Wolf also was asked about how he thinks BIS will approach potential export controls for quantum technologies, which BIS officials have said the agency is studying (see 2210270047). He said his “guess” is those restrictions could cover a wide range of exports in the quantum sector.

He said he suspects “it'll be pretty broad and sweeping controls over anything quantum related, both in terms of the hardware and as well as potentially remote access,” Wolf said. “That's completely a guess. I don't actually know.”

Wolf also questioned what kind of impact the controls will have on the quantum industry, mostly because quantum is still a “very nascent kind of technology.” Technology experts have said quantum restrictions would be premature and would only impede innovation and handicap U.S. companies (see 2305020020 and 2206220022).

“There isn't a lot of -- or any real exports to China of -- quantum-related items. So a U.S. unilateral control on quantum-related hardware probably wouldn't be that big of a deal,” Wolf said. To be “truly effective,” the controls would need to be imposed alongside allies that are also conducting quantum research, he said. But Wolf noted the multilateral Wassenaar Arrangement didn’t impose any quantum controls in its latest round of decisions released in December (see 2312080030).

Wolf also touched briefly on a report released in December by the House Select Committee on China, which asked the Biden administration to strengthen export controls and investment reviews (see 2312120050). One recommendation called on BIS to set a license review policy of denial for all exports controlled for national security reasons, which includes dual-use items controlled by Wassenaar.

Wolf said this change won’t be effective unless other Wassenaar countries also have in place a policy of denial for similar license applications. “By definition, something that's on the Wassenaar list has availability beyond just the United States,” he said. “So before going to next steps, I would recommend looking at how effective or not such a policy would be if the allies are adopting a different standard.”