Licensing

Following a year of hearings and demands for reams of disclosure from government and industry, the House Select Committee on China released its work product for 2023.   The 53 page report enumerated recommendations to address Beijing's human rights violations and military modernization, focusing on halting the genocide of the Uyghur population and curtailing profits from forced Uyghur labor. Additionally, it aims to build a more credible deterrent in the Taiwan Strait. 

Thursday, the Commerce Department’s Bureau of Industry and Security (BIS) released three rules as part of a broad effort to ease several categories of export licensing requirements and expand the availability of export license exceptions for key allied and partner countries, as well as for members of certain multilateral export control regimes.

A report by the House Foreign Affairs Committee highlights shortcomings in the U.S. export control system and calls for reforms, legislative and administrative.   Drawing extensively on the work of former Defense Department Export Control Official Stephen Coonen, the report offers a preview of the reception BIS officials can expect in next week's hearing. "Both the Trump and Biden administrations, principally from the White House, have rightly begun exerting more control over the Commerce Department’s Bureau of Industry and Security (BIS). However, no administration will be able to fully leverage the power of export controls to protect U.S. national security without Congressional action. Now, Congress must solidify the efforts of successive administrations so our future will be better secured," the authors assert. Central to the committee's findings is the concern that BIS, under the Commerce Department, has been too lenient in granting licenses for dual-use technology transfers to China, failing to adequately consider the likelihood of military or surveillance use.

Following Commerce Secretary Gina Raimondo’s call for additional funds for the Bureau of Industry and Security – the Department’s enforcement arm for export controls, Republican members of Congress called for a harder line on China first.

Tuesday, Republican members of the House Committee on Small Business wrote to Under Secretary of Commerce for Industry and Security Alan Estevez regarding the Bureau of Industry and Security’s …

The Department of State temporarily modifies the United States Munitions List (USML) Category VIII to accommodate the Korean production of their KF-21 Stealth Fighter. The Department assessed that this temporary modification does not change the export jurisdiction or classification of any existing commodities, as it only prevents the possibility of future release from paragraph (h)(1) due to use in the KF–21, which has not yet entered into production. Therefore, when the KF–21 enters production, any paragraph (h)(1) commodities authorized for export for this purpose will retain their current export classification described in paragraph (h)(1).

Defense Chiefs of the AUKUS military-industrial alliance met at the Defense Innovation Unit Headquarters at Moffett Field in  California to discuss progress for the partnership, especially Pillar II, the broad based defense industrial collaboration. The three nations are also establishing an AUKUS Industry Forum with trilateral government and industry representatives to help inform policy, technical and commercial frameworks to facilitate the development and delivery of advanced capabilities. The initial meeting of that forum will occur in the first half of 2024.  In a Joint Statement, the Secretaries and Deputy Prime Minister reaffirmed the three nations' commitment to maximize the strategic and technological advantage of AUKUS .  They agreed that advancing AUKUS requires continued commitment to streamlining defense trade controls and information-sharing while minimizing policy and financial barriers across public and private sectors.

House Committee on Oversight and Accountability Chairman James Comer (R-Ky.) joined the chorus requesting information related to the U.S. Department of Commerce’s recent decision to cease issuing new export licenses related to certain firearms, firearm components, and ammunition for approximately 90 days to certain countries.

This briefing paper on dual-use and cyber-surveillance provides on overview of current EU export controls of dual-use items in general and cyber-surveillance items in particular, and what the approach is in countries such as the US, the UK and Japan. It explains the impact of the sanctions against Russia on the export of dual-use items and the use of cyber-surveillance in the conflict in the Ukraine.

The Regulations and Procedures Technical Advisory Committee (RPTAC) will meet December 12, 2023, 9:00 a.m., Eastern Standard Time, in the Herbert C. Hoover Building, Room 3884, 1401 Constitution …

Assistant Secretary of Commerce for Export Administration Thea Kendler held a briefing November 6 to discuss the rules issued October 17th. She explained the new parameters, associated license requirements, the new notified advanced computing license exception, and some of the measures put into place to address possible circumvention of the controls.

U.S. Customs and Border Protection officers seized a shipment of China-bound deuterium cylinders in Norfolk on October 18 for violating nuclear nonproliferation licensing laws. On August 22, CBP’s National Targeting Center (NTC) identified the deuterium on the manifest of a shipping container destined to China. CBP officers detained the deuterium, and the following day requested a licensing determination from the Bureau of Industry and Security. 

Senate Finance Committee Chair Ron Wyden (D-Ore) praised the Commerce Department for putting in place new policies to prevent the promotion of US surveillance technology to foreign governments in response to his request earlier this year. “For the first time the Department is making clear that the United States will not help companies find foreign markets for products or services that undermine democracy or enable repressive surveillance and discrimination," said Sen. Ron Wyden (D-OR) applauding the change.

Congressional China hawks sent a letter to Commerce Secretary Gina Raimondo Thursday, calling for the Department  to regulate the open-source collaboration model employed in modern advanced semiconductor design.   Reps. Mike Gallagher (R-WI) and Raja Krishnamoorthi (D-IL), along with Sen. Marco Rubio and fourteen other lawmakers call for the Commerce Department to “build a robust ecosystem for open-source collaboration among the U.S. and our allies while ensuring the PRC is unable to benefit from that work.”

November 2, the Commerce Department’s Bureau of Industry and Security (BIS) released a rule adding 13 entities to the Entity List for supporting Russia’s military through the procurement, development, and proliferation of Russian unmanned aerial vehicles (UAVs). Twelve entities being added are in Russia and one is in Uzbekistan.  

The U.S. Department of Commerce  is pausing for approximately 90 days the issuance of new export licenses involving certain firearms, related components, and ammunition under its jurisdiction and the provision of new export assistance activities for such products to all non-governmental end users worldwide, apart from those in certain destinations.

The European Commission is stepping up efforts to make sure that sensitive technologies do not fall into the wrong hands, by paving the way for better coordination of export controls at EU level.  Under the EU’s Dual-Use Regulation, Member States have the opportunity to coordinate their export controls on items for which export controls have not been agreed multilaterally.

The US. State Department and Federal Bureau of Investigation, in coordination with partners from the Republic of Korea Ministry of Foreign Affairs, National Police Agency, and National Intelligence Service are releasing a joint public service announcement (PSA)  with updated guidance on red flag indicators and due diligence measures to help companies avoid hiring Democratic People’s Republic of Korea (DPRK) information technology (IT) workers posing as non-DPRK nationals. This update identifies new tradecraft used by DPRK IT workers since the release of the 2022 advisories, including new indicators of potential DPRK IT worker activity and additional due diligence measures the international community, private sector, and public can take to prevent the hiring of DPRK IT workers.

The Commerce Department appears to be considering a fast-track system, posting on their website: "Submit your Israel licensing requests here: IsraelEmergencyLicense@bis.doc.gov". There is no further guidance, including whether the application must be submitted through the electronic export license application, known as SNAP, and the time limit for issuing ”emergency” export licenses.

On Tuesday 17 October, the Commerce Department tightened controls over exports of AI-specific semiconductors. This move makes it more challenging for U.S. firms like Nvidia and Intel to market their current products in China or to launch new products as workarounds. Addressing oversights: This step is designed to mend potential oversights in the export regulations declared last year. Those regulations had been met with notable resistance from the international semiconductor sector and increased strains with Beijing.

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