The Biden Administration released its proposed "AI Diffusion Rule" Monday morning, aiming to control exports of chips used for artificial intelligence. Quotas will restrict the number of chips to be exported to about 120 countries, while a short list of G-7 and other allied countries are exempt from restrictions. Sales to China, Iran, Russia & North Korea are blocked.
The rule consists of measures:
- adding a new control for AI model weights under new Export Control Classification Number (ECCN) 4E091;
- revising the license requirements and review policy for ECCNs 3A090.a, 4A090.a, and corresponding .z items;
- expanding the country scope of License Exception Advanced Computing Authorized (ACA);
- adding new License Exceptions Artificial Intelligence Authorization (AIA), Advanced Compute Manufacturing (ACM), and Low Processing Performance (LPP) that apply to advanced computing integrated circuits, AI model weights, and related items;
- adding new red flag guidance related to AI model weights;
- bifurcating the Data Center Validated End-User Authorization into Universal and National Validated End-User Authorizations; and
- updating License Exception Notified Advanced Computing (NAC) notification procedures to improve its efficiency.
The limits focus on Advanced Graphics Processing Units (GPUs) used to train AI models. Cloud services providers like AWS and Microsoft will enjoy some waivers from the rules, in a material concession to the data center industry. Cloud providers will have geographic limits, ensuring no more than half their computing power resides offshore.
According to the White House, six key mechanisms in the rule catalyze the responsible diffusion of U.S. technology:
- No restrictions apply to chip sales to 18 key allies and partners. This flexibility enables jurisdictions with robust technology protection regimes and technology ecosystems aligned with the national security and foreign policy interests of the United States to benefit from seamless large-scale purchases.
- Chip orders with collective computation power up to roughly 1,700 advanced GPUs do not require a license and do not count against national chip caps. The overwhelming majority of chip orders are in this category, especially those being placed by universities, medical institutions, and research organizations for clearly innocuous purposes. Streamlined processing of these orders represents an improvement over the status quo, rapidly accelerating low-risk shipments of U.S. technology around the world.
- Entities that meet high security and trust standards and are headquartered in close allies and partners can obtain highly trusted “Universal Verified End User” (UVEU) status. With this status, they can then place up to 7% of their global AI computational capacity in countries around the world – likely amounting to hundreds of thousands of chips. This trusted status is granted on a global and enduring basis, allowing responsible entities to expand rapidly and flexibly, and strengthening U.S. and allied global leadership while keeping frontier training at home.
- Entities that meet the same security requirements and are headquartered in any destination that is not a country of concern can apply for “National Verified End User” status, enabling them to purchase computational power equivalent to up to 320,000 advanced GPUs over the next two years. This provision permits trusted national entities to benefit from advanced U.S. technology, serving local, governmental, and regional customers, while guarding against diversion risks.
- Non-VEU entities located outside of close allies can still purchase large amounts of computational power, up to the equivalent of 50,000 advanced GPUs per country. This cap ensures that U.S. technology is available to service foreign governments, healthcare providers, and other local businesses.
- Government-to-government arrangements cultivate an international ecosystem of shared values regarding the development, deployment, and use of AI. Governments that sign these arrangements – which align those nations’ export control, clean energy, and technology security efforts with the United States – can double their chip caps (up to 100,000 of today’s advanced GPUs).
According to the White House, the rule takes significant steps against countries of concern, constraining them from accessing advanced AI systems and the computing power used to train them. These actions include:
- Continuing to ensure that advanced semiconductors sold abroad are not used by countries of concern to train advanced AI systems, while still permitting access for general-purpose applications from telecommunications to banking.
- Restricting the transfer to non-trusted actors of the model weights for advanced closed-weight models. The rule does not in any way inhibit the publication of model weights for open-weight models.
- Setting security standards to protect the weights of advanced closed-weight AI models, permitting them to be stored and used securely around the world while helping prevent illicit adversary access.
Pushback
Chipmakers and data center providers have resisted the ruled, with Nvidia objecting:
"In its last days in office, the Biden Administration seeks to undermine America’s leadership with a 200+ page regulatory morass, drafted in secret and without proper legislative review...
While cloaked in the guise of an “anti-China” measure, these rules would do nothing to enhance U.S. security. The new rules would control technology worldwide, including technology that is already widely available in mainstream gaming PCs and consumer hardware. "
European officials reacted with similarn though more diplomatic vitriol. "We are concerned about the US measures adopted today restricting access to advanced AI chip exports for selected EU Member States and their companies," said European Commission EVP Henna Virkkunen and Commissioner Maroš Šefčovič in a statement.
"We believe it is also in the US economic and security interest that the EU buys advanced AI chips from the US without limitations: we cooperate closely, in particular in the field of security, and represent an economic opportunity for the US, not a security risk.
"We have already shared our concerns with the current US administration and we are looking forward to engaging constructively with the next US administration. We are confident that we can find a way to maintain a secure transatlantic supply chain on AI technology and super computers, for the benefit of our companies and citizens on both side of the Atlantic."
Devilish Details
As the trade security commmunity digests the new rule, some interpretations are being examined. Former BIS official Kevin Wolf with Akin Gump notes in a post:
New License Exception AIA has more than the usual number of conditions and limitations on its use.
- It’s a subset of the A:5 countries (but adds in Taiwan) and does not include other allies, such as Switzerland.
- It doesn’t apply to shipments to a company in one of the 18 countries if the company is HQ’d in or has an ultimate parent outside the 18 countries. So, AIA can’t be used to ship covered 3A090.a items to the UK if the company is HQ’d in Portugal, Greece, Austria, or Switzerland, for example.
- The exporter/reexporter/transferor must provide a certification with the ECCNs before using AIA. (4) Similar to STA, the recipient must also provide a certificate of compliance and agrees not to re-ship outside of AIA.
- Recipient must agree that it will not provide IaaS access for 4E901 models for entities HQ’d outside of or with a parent outside of the Tier 1 group of 18.
- Recipient must agree not to ship to entities HQ’d in or with parent outside Tier 1 (even if the company is in a Tier 1 country).
- the shipper must notify the ultimate consignee each time AIA is going to be used.
- The shipper must give an initial notice to BIS of the use of AIA if above a certain TPP.
While the rule has a 120 day Comment Period, the rule then becomes effective. The Washington government affairs community is hoping that recent pilgrimages to Mar a Lago and millions donated to Donald Trump's inauguration will permit a meaningful rewrite in the coming months.
[BIS Press Release].
Framework for Artificial Intelligence Diffusion
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