Senate Panel Seeks Scrutiny of Export Control Evasion, Possible Entity List Additions

A new report accompanying the Senate Appropriations Committee’s FY 2025 Commerce-Justice-Science Appropriations Bill calls for the Bureau of Industry and Security to conduct several export control reviews, including one that identifies regulatory “gaps” that have allowed controlled U.S. technology, especially semiconductor technology, to flow to China without a license (see 2407260054).

Another review sought by the committee would examine the parent companies, subsidiaries, affiliates and successors of firms on the BIS Entity List to determine whether they should be added to the list as well. The committee said it’s “concerned that foreign adversaries are exploiting U.S. export control policy through a web of subsidiary and shell companies.”

While endorsing BIS’s “aggressive enforcement” of export controls against Russia and Belarus to counter Russia's invasion of Ukraine, the committee wants a report on third-party countries that have a “history or high risk” of diverting sensitive U.S. technology to China or Russia.

With China’s Huawei continuing to develop and produce advanced chips despite being added to the Entity List in 2019 (see 1905160072), the committee believes the agency should re-examine -- and potentially rescind -- export licenses it has issued for Huawei for “low-level” semiconductor technology. To prevent advanced graphic processing units from ending up in China, the committee would direct BIS to re-evaluate its “posture” for reviewing exports of high-performance integrated circuits to the United Arab Emirates, which has growing ties with China in artificial intelligence.

Concerned that Chinese manufacturers of light detection and ranging (LiDAR) systems may pose a national security threat, the committee would require BIS to determine whether such companies should be added to the Entity List. It also seeks an annual report on the number of export licenses granted to Chinese entities on the Entity List.

Another report sought by the committee would examine the feasibility of adding the National Science and Technology Council’s list of critical and emerging technologies to the list of emerging and foundational technologies controlled by Section 1758 of the Export Control Reform Act of 2018. The committee also wants BIS to study the feasibility of equipping semiconductors with “on-chip mechanisms," which are physical devices built directly into the semiconductor that could, for example, allow the chip to be used only in situations that comply with export controls or the terms of an export license.

BIS officials earlier this year said they have no immediate plans to try to require companies to monitor their sensitive chip-related exports through on-chip hardware or through location tracking features, though some researchers said those features could help export enforcement and compliance (see 2403270047, 2401080060 and 2403080030).

To understand the impact of the Biden administration’s new interim final rule restricting firearms exports (see 2404260054), the committee also seeks a report on the national security and economic impact of the regulations. While the rule is intended to reduce the risk that firearms end up in the hands of criminals, terrorists or cartels, Republican lawmakers say it is hurting U.S. manufacturers of guns and ammunition (see 2407100058).

Turning to BIS's exporter outreach efforts, the committee calls on the agency to continue educating small and medium-sized businesses on their export control obligations.

The Senate Appropriations Committee approved the Commerce-Justice-Science bill last week (see 2407250044). The House Appropriations Committee approved its own version of the legislation earlier this month (see 2407120055).