“They Are Going to Be on the Bad Boy List” – BIS Under Secretary Alan Estevez Hints at Tough Export Control Actions

At an event promoting the launch of the Global Tech Security Commission – a project of the Atlantic Council and the Krach Institute for Tech Diplomacy – former State Department Under Secretary for Economic and Business Affairs Keith Krach interviewed Alan Estevez, currently the Commerce Department’s Under Secretary Bureau of Industry and Security (BIS).

In what he described as “my coming out party” since being confirmed as Under Secretary on March 31st, Estevez conveyed that his job really could be titled “chief technology protection officer of the United States.” While acknowledging that Russia remains a challenge, Estevez made clear that his major focus is “China, China, China.” His top long term priority is to “stop them from using our technology against us.”

A practical application of this approach should mean preventing American cutting edge semiconductor equipment manufacturers from doing business with Chinese state champion chipmaker YMTC. The best way to do this is by placing YMTC on the Commerce Department’s Entity List. YMTC has established ties to the Chinese military and the Chinese government is positioning the company to become the world leader in the production of memory chips, thus consolidating control of a critical technology in Chinese hands. Time is especially of the essence in adding YMTC to the Entity List as Apple is reportedly beginning to ship the iPhone 14 featuring YMTC flash memory chips this month. The security risk of a Chinese-made chip in every iPhone should send chills up the spine of any American who cares about their digital security and privacy.

Estevez was also quick to note that if he discovers entities violating the U.S. Foreign Direct Product Rule – which essentially prevents blacklisted companies from using American technologies obtained from other sources  – “they are going to be on the bad boy list immediately.” Here too YMTC deserves scrutiny in light of reports that YMTC has supplied Huawei – currently on the Entity List – with chips for its 20e phone.

Crucially, Estevez also recognized where BIS needs to do a better job protecting emerging technologies. He acknowledged the “risk of Chinese cash flow into U.S. businesses that are working on cool technologies…AI and things like that.” Last month China Tech Threat’s Future of BIS project released an AI paper with recommendations for how to keep American AI technology out of the hands of Chinese entities which, under the country’s military-civil fusion policy, are obligated to pass it on to the Chinese military.

Estevez also stated that safeguarding American technology from China isn’t just the job of regulators like him in Washington – it’s a “whole of nation” effort. Business leaders – especially in advanced technologies – must be clear-eyed on the implication of transactions with Chinese companies: “Any American company and allied company needs to be looking and assessing their risk calculus…The reality is they need to look and see that these are people that do not respect the law …I can stop people from selling advanced technology, but I can’t stop them from making bad deals.”

Estevez said all the right things on shielding Americans from the myriad tech threats connected to China – hopefully BIS’s follow-on actions, including an Entity List designation for YMTC, reflect the reality of the dangers Estevez clearly comprehends.