BIS Export Administration: New Organization

Export Administration is getting a new leadership framework, including the creation of Deputy Assistant Secretary roles for Strategic Trade and Technology Security, under the oversight of the newly elevated Principal Deputy Assistant Secretary Matt Borman.

The Changes involve dividing EA’s functions into two primary channels: Strategic Trade, focusing on licensing, outreach, and training, and Technology Security, which encompasses defense industrial base (DIB) responsibilities, analysis, and regulatory work.

Assistant Secretary for Export Administration Thea Rozman Kendler announced the organizational moves in a plenary address to the BIS Update Conference last week.

[remarks edited for brevity]

Russia and the PRC were at forefront of BIS’s policy decisions last year and will likely continue to be for years to come.

You can anticipate that we’ll shortly publish proposed rules implementing NDAA authority related to export controls on militaries, intelligence organizations, and security services, on which we welcome your comments. 

Still, our increasing focus on preventing adversaries from harnessing the potential of emerging technologies like artificial intelligence to advance their military capabilities and malign activities has not distracted from our traditional nonproliferation focus. Even as we expanded advanced computing controls on the PRC, we also expanded nuclear nonproliferation controls to ensure that deuterium, graphite, and other nuclear-related items are only being used in the PRC for peaceful activities such as commercial nuclear power generation, medical developments, and non-military industries.

EA had a very busy 2023. We processed nearly 40,000 license applications with an average processing time of 32 days, not including applications for the PRC. The Operating Committee heard 614 applications, the Advisory Committee for Export Policy reviewed 45, and no cases were elevated to the Export Advisory Review Board. We published 45 rules, with thousands of pages, as you know, and added 466 entities to the Entity List.

Organizational Repositioning

We are also making some internal changes in EA in light of our substantially growing responsibilities. Primarily, we’re implementing a new EA leadership framework to ensure we can continue to effectively protect national security and appropriately manage policy engagement and implementation.

Internal review recognized two main channels of activity in EA.

First, Strategic Trade – this is our licensing functions, outreach, and training mission. Second, Technology Security – this is our DIB responsibilities, as well as all of the analysis we do – whether on licensing and trade data, industry research, or intelligence – and our 232 work.

And so, we formally created two Deputy Assistant Secretary (DAS) roles to lead this work – a DAS for Strategic Trade, and a DAS for Technology Security. Above them, is the Principal Deputy Assistant Secretary, a position to which we’ve elevated national treasure Matt Borman.

In office organizational terms, the DAS for Strategic Trade will oversee the Office of National Security and Technology Transfer Controls, Office of Nonproliferation and Treaty Compliance, and the Office of Exporter Services.

The new DAS for Technology Security will be responsible for Office of Strategic Industries and Economic Security and the Office of Technology Evaluation. Those are the topline changes.

You should have pretty good understanding of the Strategic Trade mission already – so I’ll spend an extra minute on what to expect from the Technology Security side of the EA house.

Export Control Reform Act Section 1758 charges us with identifying and implementing appropriate controls on emerging and foundational technologies essential to national security.  This work, as well as foreign technology analysis and other research efforts designed to help assess the effectiveness of our export controls, will be formalized under the DAS for Technology Security.

In past year, the Office of Technology Evaluation under Kevin Coyne has led the bureau’s Section 1758 work, including through proactive research, analysis, collaboration, and consultation with interagency partners and key industry and academic stakeholders, as well as supporting engagements with allies and partners at the regimes.

And our nonproliferation experts, notably in the Chemical and Biological Controls Division have provided critical leadership in this space, through proposed rules on new technologies like peptide synthesizers.

Formalizing a Technology Security branch of EA is essential for moving BIS from its historic focus on export control regulations towards a holistic approach of assessing the intersection of tech ecosystems, export control authorities, and national security and foreign policy goals.

Related to these new branches, we moved the Munitions Control Division to the Office of National Security and Technology Transfer Controls under the DAS for Strategic Trade.

In the course of taking that on, we took the opportunity to rethink the names of some of our offices and divisions. All will be announced on new website by the end of this week.

Under our new PDAS, we formed an International Policy Office (IPO). IPO leads EA’s increasing focus on engaging on a plurilateral and bilateral basis to address evolving threats, helps institutionalize the many plurilateral and bilateral relationships we’ve developed over the last 2 years, and enables country-specific analysis not necessarily tied to a specific technology or multilateral regime.

Trusted Tech Ecosystem

You saw some of our efforts in rules published last year removing license requirements for certain items and making it easier to use license exceptions for exports to close partners. Related to that, you can expect a final Strategic Trade Authorization rule this summer.

What’s been harder to see publicly is our extensive engagements to bring friends into our advanced technology fold. We’re looking for ways to make it easier for industry to work with international partners that embrace the principles of export controls. 

Many of your companies already maintain operations in countries that don’t have export control laws and regulations in place. For those of you with multinational operations, consider the example of a Validated End User, or “VEU,” operating in India. As a VEU, this company is eligible to receive advanced tech exports without waiting for suppliers to obtain a license from BIS.

The VEU process allows for more certainty and reliability regarding the receipt of items subject to the EAR that are include in their VEU authorization. It does not have an expiration date like a license, and can be made available to re-exporters. We are working through different scenarios to see how authorization VEU could be further utilized around the world. We welcome your feedback on this.

Multilateralism

The best way to truly keep potentially dangerous technologies and know-how out of the hands of bad actors is to work together.

This is the approach we have adopted in building the Global Export Control Coalition, focused on using all aspects of export controls to degrade Russia’s military capabilities, as well as those of enablers such as Belarus and Iran. This coalition – led by the EC, Japan, UK and the U.S. – enabled us to drive new approaches to lower-level commodity controls on Russia and its partners, using Harmonized Systems (HS) codes to parse EAR99 items.

It’s also the approach we’ve applied to Russia’s efforts to stymie Wassenaar Arrangement (WA) progress. For two years now, Russia has stood in the way of new multilateral controls being adopted through the WA.  And so – through the efforts of our State Department colleagues and leading international partners – we have been creative with our workarounds. You’ll see us publish new plurilateral controls stemming from 2022 and 2023 WA discussions in the near term. 

Industry Relations

I spoke about our government to government partnerships, but let’s be clear – we rely on our close partnership with industry to protect global peace and security as well. Companies inside and outside the United States are striving to keep pace with the rapid changes to the national security landscape.

As always, we want to hear from you on the impact you see from our regulations, on the challenges you face in implementing export controls, and on the ramifications of our rules.  

Increased Emphasis on Data

The new structure of EA and our foreign government and industry engagements, reflect the data-driven nature of our mission. EA’s licensing officers, along with our interagency and EE colleagues, cannot adjudicate license applications without intelligence.

I hope you understand that we at Commerce don’t rely on State, Defense, or Energy to find derogatory information for us.  Our licensing officers assess applications based on their familiarity with technology, industry, and regional issues, as well as intel. To this end, we in EA are putting resources into improving our access to intel and collaboration with the intelligence community.

Take our advance chip and SME rules – our licensing officers, many of whom are highly-trained engineers – worked with the intelligence community to understand the threat posed by the PRC’s access to advanced integrated circuits.

With an understanding of the threat, in partnership with the intelligence community, our engineers mapped out the key technologies that are made by the U.S. and its allies on which the PRC is dependent. This information became the building blocks for the Advanced Computing rule that now limits the PRC’s ability to obtain advanced computing chips and semiconductor manufacturing equipment.

We also rely on the intelligence community to help us make the case to our allies that the technology we care about will contribute to programs that harm our national security. The more we can share intelligence about technology risks with our close partners, the more we can bring them on board with our technology control proposals.