CTT Quick Cut: BIS Is at an “Inflection Point,” Should “Rebalance Economics and Security”

Last week Congress confirmed Alan Estevez to serve as Undersecretary of Commerce for Industry and Security, finally filling the top post at the “most important agency most Americans have never heard of.”

Mr. Estevez’s confirmation comes at a critical juncture, and he inherits a full slate of issues to address.

China Tech Threat Co-Founder Dr. Roslyn Layton was joined by Kevin Wolf, former Assistant Secretary of Commerce for Export Administration, and Dr. Derek Scissors, Senior Fellow at the American Enterprise Institute, for the latest CTT Quick Cut, “Competing Views on the Future of BIS,” where Mr. Estevez and the agency’s priorities were the focus of discussion.

Setting an Agenda at BIS

Mr. Estevez needs to take the lead on setting priorities for the Bureau of Industry and Security (BIS) and working to align those with the Biden Administration’s objectives, Mr. Wolf said. “Export control policy, as this call indicates, is really at an inflection point.”

In the short-term, export controls and enforcement on Russia will dominate most of Mr. Estevez’s time, Mr. Wolf and Dr. Scissors agreed. “BIS has just done an amazingly effective job at pulling together and working with allies on very novel, creative ways to have effective sanctions,” Mr. Wolf noted.

Long-term, Mr. Estevez should work to “rebalance economics and security,” Dr. Scissors stated, adding that the BIS is not “an export promotion” or “business promotion agency.”

“BIS frequently acts like the most important factor is whether other companies will take business from the U.S. if the U.S. imposes export controls. That is a factor, but it should not be the prevailing factor,” he said.

Apple-YMTC and the Broader U.S. China Relationship

Dr. Layton agreed that attempts to balance economics and security don’t “necessarily work in practice,” pointing to recent reporting that Apple is in negotiations with Yangtze Memory Technologies Company (YMTC) to source memory chips for its next iPhone.

The bigger issue, Dr. Scissors countered, “is Chinese products coming to the U.S. and critical sectors… We don’t want Chinese chips in U.S. products.”

“Apple should not sell products in the U.S. using Chinese chips,” he added. “I say that to policymakers because I want the U.S. to avoid dependence on China-made chips… I’d say the same thing to Apple, because if they start an arrangement with the Yangtze Memory, they may find it will be abruptly cut off.”

In fact, just last week Senator Marco Rubio urged Apple CEO Tim Cook to reconsider working with YMTC. “In a more just world, the Biden Administration would have already added YMTC to its trade blacklists, including the U.S. Department of Commerce’s Entity List. This should occur immediately. But until that happens, America’s premier tech companies should recognize the tremendous risks – both to American national security and to their own ledgers… incurred by doing business with YMTC for its memory chips or any other products. No U.S. consumer should be made complicit in the PLA’s evils simply because he or she owns an iPhone.”

Dr. Scissors cautioned that “there is no good outcome for the U.S.-China relationship” under the current Chinese leadership. “There is going to be decoupling, whether we like it or not… We probably should not be helping [China] advance technologically… The easy thing to do is, don’t provide them with technology.”

Multilateralism is critical to ensure export controls are effective, Mr. Wolf argued. “History has shown that when the U.S. goes it alone, although effective in the short run, it eventually is ineffective.”

Where to Go from Here

“The problem is on foundational technologies, we don’t have anything,” Dr. Scissors said. “Even if you see losses to American firms, or a potential for losses, there are foundational technologies that should be restricted. Semiconductor technology is right at the top of that list… Doing nothing has become unacceptable.”

BIS should focus its resources on hiring experts in “non-traditional” fields, including chip manufacturing and design, Mr. Wolf added, which will “radically and dramatically advance the ability to not only get to the right answer, but ask the right questions to implement a new spirit and purpose of export controls properly.”

Mr. Wolf and Dr. Scissors disagreed whether the BIS is equipped to continue to lead on export control policy.

“The export control world is different,” said Dr. Scissors. “We have to decide whether BIS, as previously constituted, is going to be satisfactory. Part of that’s going to be determined by what Undersecretary Estevez says. If he satisfies the Congress, then we’re in business… [Otherwise] I would like to consider the possibility that BIS is no longer the appropriate venue for our current U.S. policy goals—which are different than they were 15 or 20 years ago.”

“If any agency has proved its worth at being able to achieve the really novel challenges that… exist, it’s the staff and people at BIS,” Mr. Wolf concluded. “Alan [Estevez] can really take and lead that effort.”

To learn more about this conversation, watch the replay here. Additionally, check out our policy agenda for BIS on our Future of BIS page.