McCaul Releases 90-Day Review Report of Commerce Department’s BIS
Washington, D.C. — Today, House Foreign Affairs Committee Chairman Michael McCaul released a 90-Day Review Report of the Commerce Department’s Bureau of Industry & Security (BIS), the regulatory body responsible for regulating dual-use export controls. Chairman McCaul determined that BIS has enabled a virtually unrestricted flow of American technology to CCP-controlled companies, facilitating China’s rapid rise as a technological, economic, and military superpower.
“We can no longer afford to avoid the truth: the unimpeded transfer of U.S. technology to China is one of the single-largest contributors to China’s emergence as one of the world’s premier scientific and technological powers,” stated Chairman McCaul. “Now is the time to fix this – and the stakes couldn’t be higher. The United States must have a win-at-all-costs mentality in these emerging technologies and invest in innovation while denying and delaying China’s access to critical U.S. technologies.”
- BIS overwhelming approves the transfer of controlled technology and approves the transfer of controlled/uncontrolled technology to companies on the Entity List. Housed in the Executive Branch’s lead export promotion agency (the Department of Commerce), BIS too often makes business and commerce the priority over national security.
- The flow of U.S. technology into China is fueling the CCP’s “civil-military fusion” – giving our adversary militarily useful technologies.
- The CCP regularly violates international agreements to which it has agreed. There is no reason why the U.S. should trust CCP assurances these technologies are not fueling the civil-military fusion.
- In 2018, Congress passed the Export Control Reform Act of 2018 (ECRA) to empower BIS to perform more rigorous oversight on export controls related to China. However, BIS has not taken action to create strong regulations pursuant to ECRA.
- BIS routinely ignores key input from national security and foreign policy agencies which are part of the official interagency review process.
- BIS approves virtually all license to export controlled technology to China, and many uncontrolled technologies are in fact critical to national security.
- The Export Administration Regulation, the regulations that implement ECRA, contains the Commerce Control List (CCL). All CCL items have military or national security applications, but licenses for the export of these items to China are either approved or fall under a license exception of “No License Required” classification.
The report provides in-depth recommendations and analysis of the many problems in the United States’ outbound export process, but here are a few of the recommendations made by the Chairman and Committee in the report:
- U.S. export control officials should assume any militarily useful item transferred to China will be diverted to its military. For that reason, at the very least, there should be a policy of denial for all items controlled for national security reasons to China.
- BIS should specify what a “presumption of denial” includes, or Congress should codify it.
- BIS should adopt a standard definition of a Chinese military company, given China’s civil-military fusion.
- Approval processes for licensing must be reformed to adequately include input from national security bodies.
- U.S. export regimes must evolve in two simultaneous tracks:
- BIS needs major structural reform to prioritize national security.
- U.S. export regimes must evolve to stop the flow of U.S. national security technologies to China, including reinvigorating plurilateral export controls and issuing new controls on fundamental research.
- BIS is understaffed and lacks resources to conduct oversight
- ECRA should be amended so BIS can charge fees on licenses to support enforcement efforts.
- BIS should also focus on hiring regulators with skills such as relevant language proficiencies.
- BIS must seriously review how technologies are listed on export control lists, and control or re-control certain national security items.