Practitioner Profile: Alan Estevez

As former Under Secretary of Commerce for Industry and Security, Alan Estevez has had a front-row seat to many of the technological shifts of the past three decades — and their growing influence on society, governance, and national security.

The Export Practitioner spoke to the veteran of both the U.S. Department of Commerce and U.S. Department of Defense about the lengthy national security career he says he “stumbled” into, and some of the more recent shake-ups within the Bureau of Industry and Security. The conversation has been edited for length and clarity.

The Export Practitioner:  Your agency was working very hard to curb China’s access to advanced chips up until the bitter end. How concerned are you by recent developments on the AI chips front?

Alan Estevez:  First, I need to point out that our goal was cubing access for the PRC – because they will use advanced AI chips to develop advanced AI capabilities for their military.  In that regard, I think that the H20 decision [14120]was not the right decision. I think there are people in the administration who believe that that was not the right decision. Obviously, there are others who do, and that's the way it rolled out. 

I think we probably would've come around to the H20. We did a lot in the last week. Trying to squeeze that in would've been one brick too heavy, quite frankly, and we liked to socialize and talk to people before we did things like that. The president is very transactional. He is very focused on making deals, so I am concerned that there could be some national security risk traded away in a larger deal.

With the H20 deal, it really feels like everything is open for bidding.

Well, that could be, but aside from AI Diffusion, none of the PRC related semiconductor rules have changed to date. The chip controls remain. No one is selling chips above our parameters to the PRC. The H20, by the way, is below the parameters that we set. The controls on anything above an A100 equivalent remain in place. The controls on semiconductor manufacturing equipment remain in place.   

Our agreements with our allies remain in place, so they're also doing things themselves to control access to U.S. technology. Could some of that be loosening and traded away? Sure, and that would be concerning. But right now, those things are all in place.

Let’s rewind to your career before BIS. You spent 35 years climbing the civilian ranks at DoD, and you were at the tip of the spear in terms of the banalization of high-tech in the military. Is that fair to say?

In certain aspects, yes. I was involved with high tech in the military. When I became the Assistant Secretary of Defense for Logistics and Materiel Readiness, I was the senior career civilian logistician in the department, as a senior member of the Senior Executive Service. I had come up through logistics ranks inside DOD, so at my core, I'm a defense logistician. 

How did you come to DoD and logistics? 

Logistics was more or less a stumbling thing. My father was a retired Army colonel. My mother  worked for the government on and off for a long time. I grew up in a family that was steeped in service to our nation, so I had that going for me.

 When I graduated college, I really wasn't sure exactly what I wanted to do. I had taken the civil service exam — something that they don't do anymore — And I got called up for a job in logistics at DoD. I said, I'll do this for a year or two until I figure out, what direction I want my career to go in. A year or so into it, I said: I’m pretty good at this. I enjoy doing what I'm doing. And I rose through the ranks pretty rapidly.

And then you went to Deloitte before you moved to Commerce. 

Yes, when I left DoD I was the Principal Deputy Under Secretary of Defense for Acquisition Technology and Logistics, the No. 2 acquisition official in the department, overseeing all the R&D; overseeing DARPA; overseeing the Missile Defense Agency at that time, the organization has changed since. So I was responsible for all the installations and, of course, all the logistics.

When I left DoD, I went to Deloitte. I thought I would never go back into government service and I had done my time. I really enjoyed my time at Deloitte, and was doing just fine there. Then, Secretary Raimondo cold-called me one afternoon in early 2021 and said, “I want to talk to you about this job.” I said, “Great.” 

We had a good conversation and at the end she said, “You're on board?” And I said, “Yeah, no. I don't think so. I'm really happy to be out in the private sector.”

She said, “Yeah, that's not the right answer. I’m going to stay on the line until you say yes.” [Laughter]

And the rest is history, as they say. 

The rest is history. Gina Raimondo can be a very persuasive person.

Was there any kind of learning curve you encountered shifting from a DoD mindset to Commerce?

 Yes. I was not steeped in the EAR. People would come in and start talking to me about ECCNs and footnotes, and I’d say, “Alright, speak to me in English. What commodity are we talking about here? Give me the particulars of that commodity and I'll take a shot at what I think the risks are.”

 What guided you in building out your leadership team at BIS?

The career staff was inherited. The presidential staff was picked out of the White House, of course, and a lot of them were, in fact, in place before I even got confirmed because I had a hangup in my confirmation, which is a normal thing. Then I built my staff around the way I operate, so I had an excellent chief strategy officer. I had an excellent chief of staff, excellent deputy, good press personnel and good [legislative affairs] people, which is really the political staff inside BIS. 

 BIS is way different than DoD. My front office at DoD had two superstar O-6s, one of whom was going to be a general officer, plus a slew of people to keep the paperwork flowing; access to cars, planes and automobiles. You don't have that at Commerce.

 What do you see as the biggest misconception about BIS now that you're back in the private sector?

In terms of licensing, there are a couple of things.  One, of course, Commerce does not control its own fate there. It's got an inter-agency process that it goes through, so Commerce can't say, “I approve this license.” It's got to be approved by the other agencies as well. Congress doesn't understand that either. They want to hold you accountable for decisions that were made across the interagency.

 They don't recognize the lack of needed manpower. Certainly, not everyone understands, that in addtion to developing regulations and managing the license process, that BIS is also operating 170 plus federal export enforcement officers — guns, badges, warrants –– who are managing the export control legal framework, violations and the like.

 And then I don't think that everyone really understands that it's truly a national security agency and that it focuses on protecting technology from falling into the wrong hands so that U.S. technology is not used against the country. 

For example, if you look at my travel patterns from when I was the undersecretary and we were doing the big China semiconductor rules, I spent a lot of time overseas talking to our allies and explaining what we were doing and why. I wanted their support in doing what we were doing. But I also spent a lot of time in Silicon Valley meeting with CEOs or senior vice presidents, again, explaining what we were doing so that they would understand why it was and the national security risks that we saw. Frankly, at DoD, most of the defense primes have security clearances as part of the business, and [BIS] would be better off if [the agency was] able to share some intelligence with companies so they would see the risks and the rationale behind what we're doing. 

 Can you say more on that? How would it help?

Well, I spend a lot of time reading intel and looking at threat vectors and asking: Is this company a bad guy? What's the People's Liberation Army up to and what's their modernization vector? What are they trying to do? Being able to show that to companies would give them a better understanding of why we were restricting what we're restricting from them. It's not some malice thing. It's not just that we're guessing; it's an informed guess, even if all intel has vagaries of how good it is.

I was just reading Covington’s client alert about the BIS Affiliates Rule, and I couldn't help but wonder if it might work a little better if the AI Diffusion Rule was still in place. 

I'm not sure that that's the case. I look at doing something like the Affiliates Rule. I understand why they'd be interested in doing that because in the People's Republic of China ownership is obfuscated. You are worried about cutouts and false front companies and things like that. The problem you have with that rule is that it's fairly hard for a company to discern that. It's hard for the government to discern that with the resources that the government has available, so it becomes an enforcement nightmare, both for the government and for companies. So it's going to be very hard to deal with. Plus it takes some nuance out of the equation that sometimes is in the interest of the government.

The Diffusion Rule was a different set of issues. But the Diffusion Rule was trying to preclude PRC access to high-end data centers where they could train large language models, without us seeing it. Even under the diffusion rule, the rules weren't no PRC access to those data centers. It was access for purpose. Of course, the Diffusion Rule is in abeyance, so it's still on the books.

 When you look back at your time at BIS, what are you most proud of? 

​I think the controls we put on chips and semiconductor manufacturing equipment and, it was some things we did at the end around biological, but mostly the semiconductor stuff we did for China was critically important. I'm very proud of that work. I'm also proud of what we did to impact Russia's industrial base following the invasion of Ukraine.

 Before I let you go, what do you have to say about the current focus on Section 232 investigations at BIS?

 They're certainly doing — and they do not have the resources to do — a whole bunch of 232s. My view is that 232 should be for a national security rationale, and it's hard for me to understand what the national security rationale is for some of the things that they're controlling under 232s. I will note that the lawsuit involving IEEPA tariffs does not implicate 232s, so I think you might see even more should that case go the wrong way. There's pretty broad language in the space, but that plays into the way this administration is managing things outside the bounds that the past Democrat or Republican administrations would've adhered to.