How BIS Has Accommodated Corporations at The Expense of National Security

By Steve Coonen

Recently I was asked, “On a scale of A to F, how would you grade BIS’s performance over the past 5 years?”

My response: “If one removes ‘security’ (the S from BIS), then BIS fully merits an A+.”

That’s not a compliment. For years BIS has accommodated corporations and industry groups at the expense of American national security.

For starters, the Commerce Department’s core mission of advancing U.S. economic interests has prevented an appropriately rigorous approach to export controls. The Department of Commerce’s self-described mission is to “to create the conditions for economic growth and opportunity for all communities.” Consequently, BIS’s goal of denying the export of U.S. technology which can be used for military purposes is in direct conflict with the Department of Commerce’s core mission of generating prosperity. Not only is BIS subject to industry pleas for leniency, but its working level officials unjustly place h bureaucratic pressure on other interagency stakeholders to maintain high rates of approved exports. The result is an export control system that prioritizes corporate interests over national security ones.

Today, even though a pivot towards Asia and recognition of China as the U.S. pacing threat has been captured in many national security strategies over recent years and administrations, BIS has remained wedded to an overly complex system of export controls that was not designed to combat Xi Jinping’s techno-security state. Officials across the federal government are willfully blind to China’s manipulation of the export control system, and how its state-sponsored policy of military-civil fusion allows Beijing’s generals and spies to obtain American technologies. Consequently, U.S. industry is one of the most prolific exporters of militarily useful technology to China.

Some export control officials, lobbyists, and think-tank analysts assert that U.S. industry’s self-regulation is sufficient to prevent the export of sensitive technology. Of course, industry will not submit export applications for technologies that they know will be denied. But the reality is that U.S. industry will export whatever and wherever it can legally. Industry relies on the USG to draw the line and effectively adopts a mindset of, “If we shouldn’t export it, the USG can deny it.” BIS, in turn, will approve applications based only on the false promises of Chinese entities. It’s this kind of vicious cycle that allowed the Department of Commerce to either approve or return without action 99.5.% of all applications for the export of technologies to Chinese heavyweight legacy chip manufacturer SMIC from November 9th, 2020 to April 20th, 2021.

In recent years, bipartisan legislators who have recognized BIS’ deficiencies have exerted new  pressure to reform BIS and institute new export controls. But industry has fought back. The Economist has reported that U.S. semiconductor equipment manufacturers Applied Materials, KLA, and Lam Research, which have raked in hundreds of billions of dollars from China, have pressured the Biden Administration for fewer restrictions, which would “allow the toolmakers to retain some portion of their Chinese revenues.” In July, Bloomberg reported that the heads of Intel, Qualcomm, and Nvidia were unleashing a lobbying effort of their own to discourage the Biden Administration from new limits on what kind of sales they can send to China.

Industry’s efforts to target D.C. officials have been aided by a “revolving door” culture between BIS and the private sector. Case in point: in 2020, Assistant Secretary of Commerce for Export Administration Richard Ashooh resigned from his post to become the Vice President of Global Government Affairs for Lam Research, one of the companies most invested in selling its equipment to Chinese chipmakers. Former officials should not be using their insider knowledge to help companies circumvent restrictions put in place to protect American national security.

In total, perhaps the most dangerous insider threat to U.S. technology is not from academia, the engineer who defects, or the unsuspecting business development official with controlled information on his unattended laptop in a hotel room in Beijing. Rather, it is a complacent and willfully blind bureaucracy working to sustain a defective system, and the corporate leaders who have chosen to put cash over country. Congress should act to reform BIS and the broader U.S. export control system before the Chinese military obtains more American technology.