Import regulation and export controls: "two sides of the same coin"

In the waning days of Summer, we sat down with Nazak Nikakhtar, former Commerce Department official and current Chair of Wiley Rein's National Security Practice to hear her thoughts on ECRA, the Entity List, BIS-ITA interplay, and navigating a career in private practice and public service.

The Export Practitioner: I usually start by asking something current events-related, but I’ve found in our past interviews that you’re usually thinking about the next big event before it happens. So tell me, is there anything you're dying to talk about?

Nazak Nikakhtar: I think the most interesting thing in this space right now is what is about to happen in the U.S.-China relationship. China has us in a tough spot with export restrictions on rare earths and other critical raw materials that we urgently need.

However, I don’t think this situation is going to be resolved any time soon. If China doesn’t give the United States another one-year extension on its October 2025 export restrictions or goes so far as to add more materials to its export controls on America, then I could see a world in which President Trump implements aggressive export controls and tariffs on China – potentially even sanctions.

When evaluating the impact already on the U.S. defense industrial base from China’s export restrictions, which started in late 2024 or early 2025, the cumulative effects have been so severe. The U.S. industrial base is very much hobbling along in a severely weakened state, grabbing whatever materials it can, and if this trend continues, it won’t be sustainable.  We’ll soon be in a gloves-off scenario with China.  Then the big question will be quickly will the battling back-and-forth escalate? I think for China, it’s to their advantage to exacerbate our supply chain vulnerabilities now, before we rebuild our domestic industrial base.

EP: You oversaw a particularly active period for BIS in terms of China restrictions. It was also a momentous period for the agency because it was right as the Export Control Reform Act (ECRA) came online. Take us back to 2019.

Nazak Nikakhtar: Let's start with ECRA. In 2018, Congress gave BIS its permanent statutory authority to administer the Export Administration Regulations (EAR).  At the same time, there were diverging interests, heated debates, over how broad or expansive Congress should make ECRA. Ultimately, ECRA ended up being a compromise, continuing prohibitions on BIS’s ability to control some technology, for example informational materials, but it also gave BIS the ability to control some U.S. services to foreign persons.

ECRA ensured that BIS could not regulate informational materials, pursuant to the Berman Amendment. By carving this out, the law deterred BIS from going in and revisiting the issue of controlling published materials, for example dangerous technologies that are published online purposely to fall outside of BIS’s controls. That said, overall, BIS has some fairly remarkable authorities solidified through ECRA. Importantly, ECRA mandated that BIS controls emerging and foundational technologies.

One aspect that arose from ECRA that was, and still is, subject to widespread policy debate is whether semiconductor manufacturing equipment should be classified as foundational technologies subject to controls.  It’s important to remember people view BIS's authority as being used only to impose controls on new technology that foreign entities don’t yet have. But including foundational technology in the statute was a reminder to BIS that the bureau can, and should, control technology that already exists – a reminder that the notion of foreign availability didn’t much matter, that generally available foundational technologies should nevertheless be controlled for export. I thought that was incredibly important. 

ECRA also coincided timing-wise with President Trump’s Phase One deal with China.  That deal limited BIS’s ability to push national security restrictions on China because others in the Executive Branch took a more permissive view of trade with China.  Those individuals wanted to sell China more soybeans, commodities, and technology, and they needed China’s agreement to buy these items, so these officials questioned the rationale of imposing onerous export restrictions on China.

It’s so puzzling that whenever each new administration comes in, there's a real belief among many leaders at the top that they will be the ones who will finally change China – like, "I'm the one who's going to finally tame the China beast. You guys just stand back. I've got this."  Yet nobody has ever got it.  No one has been able to successfully address the complex issues in our relationship with China for decades. I don’t think anyone ever will because China doesn’t want to change.  That’s the truth.  [Laughter]

EP:  But one action that always sticks out in my mind, in terms of that early public introduction of the technology tensions between the US and China, was the entity listing of Huawei, which, of course, you oversaw as well. 

Nazak Nikakhtar: The interest in pursuing severe restrictions on America’s ability to do business with Huawei actually preceded the first Trump Administration. It goes back as far as the Bush years, maybe even earlier.  In the first Trump Administration, the State Department had already prepared an Entity Listing proposal for Huawei when, in early 2019, the news broke of DOJ's indictment of Huawei for violating financial sanctions against Iran.

Now, remember that the Entity List has a very easy, low legal standard for designation and Huawei for years had been a good candidate. But in 2019, given Huawei's significant economic ties with American businesses — because they purchased so much across the semiconductor value chain from American companies — there were major economic impacts to consider prior to the Entity Listing. Yet the reality was that Huawei had violated U.S. sanctions so we had to do something.  And, at the time the violation occurred, the President needed more leverage with China on the Phase One deal. So, he ultimately decided – after much deliberation – to Entity List Huawei in May 2019.  It was not an illogical decision, Huawei did violate U.S. sanctions after all, the company could have been subject to secondary sanctions – they avoided that outcome. 

But by the time the Entity Listing was published, even within the Commerce Department, there was enormous pushback. The designation raised a complex issue: once American businesses become so economically dependent on revenue from China, should the U.S. government restrict business with the Chinese entity for national security reasons even when doing so severely hurts American businesses economically?  This was a major debate – American businesses were lobbying on behalf of Huawei to keep their revenue stream going, and that emboldened the national security hawks to push for further restrictions.

The National Institute of Standards and Technology (NIST) was getting calls from companies alleging that they couldn’t engage in international standards activities given Huawei’s entity listing and presence in the standard-setting bodies.  They were concerned about inadvertently sharing information and violating the Entity Listing.  The Commerce Department convened a meeting among all its Under Secretaries to evaluate the impact of the Huawei designation.  And due to the sheer size of Huawei and its entanglement with so many U.S. businesses, BIS found itself repeatedly fine-tuning the implementation of the Huawei Entity Listing to address the impact on U.S. businesses.

The other important item to note is that Huawei truly elevated the debate over whether the U.S. should pursue unilateral controls or multilateral controls. Ultimately, the Huawei Entity Listing showed everybody that unilateral controls work. However, I think we were a little bit naive in thinking that our allies would restrict transactions with Huawei in a public way like we did.  We asked them to pursue similar measures, and they stalled.   

What we ultimately realized from this experience was that, when countries saw the U.S. backing away from Huawei, they did the same but in very different ways – ways that made sense based on the political system and sensitivities in their own countries.  Ways that wouldn’t compel China to retaliate against them.  Some pulled away from Huawei very abruptly, like the U.S.  Some did so subtly, for instance, by creating trust-based standards that effectively eliminated China from their telecom sectors.  They didn't name Huawei in their bans; they didn't even name China.  But the outcome was the same – the removal of Huawei from their core telecommunications infrastructure.

Looking back, I'm proud that we had the courage to move forward with the Entity Listing, and that we provided top cover to countries to decouple from Huawei in their own ways. We educated other countries about Huawei as a legal entity, but also as a symbol of the risks of doing business with high-threat actors.  I was proud that we showed the international community that unilateral controls do work – America moves first and provides cover for others to follow suit.  I was really pleased when [President Joe Biden’s National Security Advisor] Jake Sullivan spoke very similarly about the effectiveness of unilateral actions. Huawei was the first big instance where America’s unilateral actions caused the international community to sever economic ties with a high-threat commercial actor.  The actions were effective in many ways and symbolic in important ways.

EP: And in case you didn't have enough on your plate setting these huge precedents at BIS, you were also running the International Trade Administration during the same period. I’m curious how working both roles informed your decision-making at each agency.

Nazak Nikakhtar: The U.S.-China relationship back then was defined by significant, high-risk economic competition. 25 years ago, my first job at the Commerce Department was at BIS, and then I went to ITA. Then, when I went into private practice, I worked at a firm that was dedicated to advancing the interests of American companies and there I was working on both trade and export control matters. For me, as an economist, economic competition had two key puzzle pieces. Import restrictions level the playing field for American businesses, and export restrictions guard our businesses’ national security interests. They were two pieces of the same coin – economic and national security interests: What do American industries need both in terms of fair competition and the ability to outcompete?

EP: Under Secretary Kessler has a similar trajectory to yours, in that he's also worked at both the ITA and BIS, as well as private sector firms. Do you see a similar kind of philosophy in his leadership at BIS?

Nazak Nikakhtar: Yes, I think so. I think Kessler, having come from the trade world, views import regulation and export controls as two sides of the same coin, like me. We have very different backgrounds that inform that viewpoint, though. He's been a trade attorney, so he approaches BIS from a trade attorney's perspective. Mine's a little bit different. I worked at BIS prior to performing the duties of the Under Secretary, and I had done export control work in the private sector, and I also suppose having been born in a foreign country and having freedom ripped away from you informs your views on how fragile national security is and how committed we must be to protecting it.

I believe people involved in export controls need to understand that, fundamentally, export controls are as much about economic competitiveness as they are about national security: Should we be exporting technology in light of the economic power and military capabilities it gives the recipient? Can they exploit that technology to harm our interests?  Our duty in America is to prevent our technologies from being used by adversaries to harm us and our allies.  We need to take that responsibility seriously. 

It’s hard to adjudicate export control licenses and make policy decisions without having a sound economic background. I really think it's a force multiplier. At a time when we were making truly unprecedented policy decisions at BIS — implementing ECRA, working on controlling emerging and foundational technologies, aggressively leveraging the Entity Listing to address the new emerging technology battle with China, curbing the technological rise of China’s military, and combatting forced labor — having the economics expertise helped me defend our policy actions much more persuasively.  And importantly, to institute measures to help businesses pivot to new trading patterns that would help them recoup lost profits and that were much more sustainable.  That is immensely important.

EP:  What philosophy guides your leadership now as the head of Wiley's National Security Practice?

Nazak Nikakhtar: I'm lucky to be working at a firm, Wiley, that attracts clients that believe in America, in America’s partnerships with its allies, and clients that are committed to advancing the growth of the US industrial base. My clients are incredible. They bring novel technologies to the marketplace to help American interests domestically and globally across all sectors.  They believe in leveraging the power of America and our allies to rival our adversaries.  I’m proud of the work we do together.

A strong America and America’s alliances are a huge deterrent.  That really is the philosophy. My objective every day is to support incredible companies that are tackling enormously complex innovation challenges and developing technologies that solve gaps in America’s supply chains in ways that advance America’s defense industrial base and our collective capabilities with our allies.  I’m so proud of the work that they do because they’re investing in our collective security.  That’s why my colleagues and I dedicate ourselves to helping these companies scale and out-innovate, because that’s the ideal outcome for America and its partners.

EP: Our September “Back-to-School” feature notes the increasing prominence American universities have recently taken on in the area of export controls. Is there any facet of that conversation that you think bears more coverage?

Nazak Nikakhtar: During the first Trump administration, I saw just how much sensitive technologies universities were sending to China through R&D projects. I testified to Congress that we need to change the definition of foundational technologies to better control what universities can and cannot share.

I had also proposed issuing “Is informed” letters – by posting on BIS’s website – warning all American researchers and Universities that they could not share specific technology with foreign adversaries without appropriate authorizations from BIS.  That still hasn’t happened, which means that highly-sensitive research is seeping into Chinese military institutions through our universities.

EP: OK, an easy one to finish: What's your proudest professional moment to date?

Nazak Nikakhtar: When I was approached to serve at BIS, I was a new partner at a firm; I had an amazing book of business, and I made the decision to step away from all of it because I wanted to serve my country and tackle America’s most pressing national security interests on a much bigger scale. I'm immensely proud of the fact that through my work and the work of many of my colleagues in the first Administration narratives, we alerted the world to the dangers that China poses.  Those dangers are now widely known worldwide.  It was a huge pivot from America’s prior position that China is an important ally.  Our work wasn’t popular then, but people see the importance of what we did now.

We certainly woke up most of the rest of the world to serious national security threats, and that has had enduring effects.  For that, I'm really proud.

Thank you Nazak.

Nazak Nikakhtar chairs Wiley Rein’s National Security Practice. During the first Trump administration she served as the Commerce Department’s Senate-confirmed Assistant Secretary for Industry and Analysis and performed the duties of Under Secretary for Industry and Security, overseeing the Bureau of Industry and Security.