Jeffrey Kessler the Administration's nominee for Under Secretary of Commerce for Industry and Security had a relatively easy go of it in front of the Senate Banking Committee Thursday, as members sunk their teeth into the higher-profile nominees who shared the dias.
Ranking member Elizabeth Warren and several others ignored the future BIS Chief, dedicating their questioning to the President's nominees for Chair of Council of Economic Advisors Stephen Miran, Director of the Federal Housing Finance Agency William Pulte, and Director of the Consumer Financial Protection Bureau Jonathan McKernan, who one Senator referred to as "the lead horse at the glue factory."
In his testimony, Mr. Kessler characterized the Bureau of Industry and Security (BIS) as a “critical tool in America’s policy toolkit for ensuring continued technological leadership and technological supremacy.”
He outlined BIS’s mandate to prevent the proliferation of weapons, block terrorists from acquiring dual-use items, preserve America’s “qualitative military superiority,” and protect the defense industrial base. “All of those goals are things that we have to do with export controls,” he stated.
Kessler acknowledged the challenges posed by adversaries who “are sophisticated and they work hard every day to get around export controls and other rules that America has to prevent them from getting sensitive technologies.” He stressed the need for BIS to be “as nimble as our adversaries” and to “keep pace with them.”
"The priority for BIS must be and, and I will be laser focused on how to keep sensitive technologies, sensitive goods, software out of the hands of American adversaries, including the CCP, including China, On day one I'm going to review with the staff the whole structure of the organization, the decision making processes and make sure that the agency is built to meet that challenge."
When questioned about reports that Taiwan Semiconductor Manufacturing Company (TSMC) produced “hundreds of thousands of controlled chips for Huawei” due to an enforcement failure, Kessler affirmed that this was a “huge concern.”
"We can't risk having the a cumbersome rulemaking process or bureaucracy slow us down when we're talking about something of national security
"I think that the [AI Diffusion] rule was intended to address a real problem. And the problem is how do we prevent China and its proxies from accessing the most advanced American technologies? Wherever located in the world, whether they're located in the United States or outside the United States,
"I'm not sure that this rule was done thoughtfully, was done as well as it could have been there. It's a it's a very complex and bureaucratic rule. So that's one of the things that I'd like to review when I go in. I think that the identification of the problem was largely correct, but I'm not sure that this is the right solution," he said.
He underscored the necessity of strong enforcement, ensuring that “BIS uses the full scope of enforcement [and] penalty authorities that it has.” He committed to “conducting investigations and working in an integrated way with the intelligence community [and] the defense community” to prioritize enforcement targets and ensure that “the rules themselves are appropriately targeted to the challenges that we face.”
"I will immediately start to learn about [enforcement] when I get into office. I'm concerned, especially on the enforcement side that the resources aren't at the level they need to be at.
"You know, we need muscular enforcement of these rules to make them effective. And you know, right now it's something like 150 or 200 people in export enforcement who are responsible for enforcing these rules around the world. And in that question whether that's adequate - whether a ratio of one person to one country is adequate."
Mr. Kessler served as Assistant Secretary of Commerce for Enforcement and Compliance from 2019 to 2021, leading the office responsible for enforcing U.S. anti-dumping and countervailing duty laws, monitoring foreign compliance with trade agreements, and evaluating Section 232 steel and aluminum tariff exclusion requests.
More recently he has worked as a partner in WilmerHale’s International Trade Practice, representing U.S. manufacturers in trade remedy cases.
While Mr. Kessler brings a strong legal background in tariff and trade enforcement and compliance, the technical and national security elements of export administration will call for a high degree of collaboration with what one senator referred to as "career bureaucrats [who] over the years at BIS have rubber stamped deals for decades and sent some of our most important technology to China"
“I will not rubber-stamp deals like that, and I will make sure that we scrutinize any requests along those lines very carefully and make sure that every action that we take is consistent with our national security priorities,” he replied.
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