Researchers Ask BIS to Prioritize Enforceability in Potential Changes to AI Diffusion Rule
Although the Bureau of Industry and Security's AI diffusion export control rule has sparked broad pushback from some U.S. allies, it appears to take a “strong step” toward improving BIS efforts to prevent chip smuggling to China, said researchers with the Center for a New American Security. If the Trump administration decides to tweak parts of the rule or revoke it altogether, the researchers warned, the U.S. will need to find other ways for BIS to better enforce its chip controls.
Sign up for a free preview to unlock the rest of this article
Communications Daily is required reading for senior executives at top telecom corporations, law firms, lobbying organizations, associations and government agencies (including the FCC). Join them today!
They also called on the administration to avoid any lapse in the restrictions if it decides to rework the rule before it takes effect later this month.
“Even short pauses in controls could open the floodgates for chip stockpiling and smuggling, with long-term implications for U.S. AI leadership,” said CNAS researchers Janet Egan and Spencer Michaels in public comments to BIS released last week. “Moreover, any policy is also only as good as its implementation. We urge policymakers to align the design of any rules with the capacity to implement and enforce them.”
Some U.S. trading partners, including the EU, have criticized the AI diffusion rule, saying it places unfair restrictions on some European nations listed in Tier 2, the mid-tier group of countries subject to caps on AI chips and other restrictions (see 2502200051). But CNAS noted that those restrictions could prove useful for U.S. efforts to track smuggling by other countries in Tier 2 -- such as Singapore and Malaysia -- that pose a higher risk of export control evasion.
Companies in those nations would need to acquire certain export licenses and be subject to vetting and biannual chip accounting, or they would need to apply through the BIS Validated End User (VEU) program, which CNAS said requires companies to “divest their ties with China.”
“These requirements appear set to make chip smuggling to China significantly more difficult and costly,” the researchers said. “Even under the low volume exemption for purchases of up to 1,700 H100-equivalent chips per year, notification requirements would give BIS visibility over suspicious upticks in imports and allow BIS to investigate accordingly.”
BIS likely still will need more enforcement resources, they said, but “the additional information provided under this scheme would allow for more effective enforcement.”
If the Trump administration decides to rescind those vetting requirements or other conditions under the VEU program, “it will be important for it to find other ways to more thoroughly enforce export controls to prevent China from acquiring AI chips,” the researchers said. “This will likely necessitate substantially more resourcing for BIS, which the administration should incorporate into the design of its overall chip export control strategy.”
They also said that if the administration revokes the rule, the U.S. should maintain existing caps on the number of chips that can be exported specifically to the United Arab Emirates and Saudi Arabia, two nations that “pose significant threats” to American AI leadership. Both countries have “access to massive amounts of easily accessible capital, energy and resources,” and their governments could “easily” pull back regulatory barriers so their firms can buy and develop large quantities of advanced AI chips. They also both have “strong ties” to China, the CNAS researchers said.
“It would be antithetical to U.S. security interests to cede technology leadership to anyone, let alone non-democratic countries with links to China.”
The researchers noted that some analysts are concerned U.S. export controls will only push other countries to partner with China instead of the U.S. UAE government officials even “echoed this messaging” in interviews with CNAS, they said.
But they cast doubt on whether this is a “genuine risk,” saying China doesn’t “currently present an attractive alternative” to advanced U.S. semiconductor technology, including chips designed by Nvidia. They also said China-made AI chips still rely heavily on U.S. supply chains. “The United States therefore has significant leverage in implementing restrictions to protect its technological edge.”
The U.S. also should maintain the rule’s “model weight protections,” the researchers said, which could make it harder for foreign businesses to evade U.S. export controls by remotely accessing advanced chips through cloud computing providers. If the Trump administration nixes those restrictions, BIS should explore introducing license conditions that require importing companies to put in place know-your-customer procedures “to identify entities using frontier levels of compute and prevent Tier 3 countries from accessing significant compute levels,” they said. “This could form part of the datacenter VEU program.”
Although they acknowledged that the administration could rework the rule, officials should still follow its “core national security objectives” of preventing advanced AI technologies from being proliferated among U.S. adversaries, they said. They also said the U.S. needs to collaborate on any new rule with other governments “to offset the perceptions of restrictions and cement the U.S. as the preferred AI partner globally.”