The Commerce Department Bureau of Industry and Security added five new national security-related technologies to the export administration regulations’ commerce control list, said a Thursday notice in the Federal Register. The additions stem from changes made to the Wassenaar Arrangement’s list of dual-use goods and technologies agreed to during a 2018 plenary meeting, BIS said. The changes add “recently developed or developing technologies” that are “essential” to U.S. national security: “discrete microwave transistors,” “continuity of operation software,” “post-quantum cryptography,” “underwater transducers designed to operate as hydrophones” and “air-launch platforms.” The changes took effect Thursday. Shipments “on dock for loading, on lighter, laden aboard an exporting carrier, or en route aboard a carrier” to a foreign destination on or before Thursday may proceed to the destination.
Senate Commerce Committee Chairman Roger Wicker, R-Miss., Senate Intelligence Committee Vice Chairman Mark Warner, D-Va., and Sen. Tom Cotton, R-Ark., led Wednesday night filing of the U.S. 5G Leadership Act (S-1625) in a bid to bar from U.S. networks equipment from Huawei and other Chinese telecom equipment manufacturers deemed a national security threat. Congress has repeatedly raised concerns about ZTE and other Chinese firms in the context of U.S. competition against China for leadership on 5G, including during a Senate Judiciary Committee hearing last week (see 1905140079). S-1625's filing also follows President Donald Trump's executive order to bar some foreign companies' technology from U.S. networks and a subsequent Department of Commerce Bureau of Industry and Security notice adding Huawei and some of its affiliates to a list of entities subject to export administration regulations that have a presumption of denial (see 1905150066 and 1905160081). BIS soon after issued a general license temporarily allowing certain transactions by Huawei and the affected affiliates through Aug. 19 (see 1905210013). S-1625 would make it U.S. policy that U.S. telecom networks “should not incorporate any hardware or software produced by, or any services offered by” Huawei, ZTE or other entities that are “subject to extrajudicial direction from a foreign government.” The bill would require the FCC complete its work on an NPRM to counter the threat from companies deemed a security threat to U.S. telecom networks or the communications supply chain (see 1812210032). It would create a grant program to make up to $700 million available annually to help U.S. communications providers remove from their networks Chinese equipment determined to threaten national security. “5G networks need to be robust and secure, and not rely on equipment or services that pose a national security risk,” Wicker said. “While we’ve made enormous progress in educating the private sector of the dangers [Huawei and other] vendors pose, we haven’t put in place policies to help resource-strapped rural carriers address and eliminate those risks,” Warner said. “We need to find insecure communications equipment, fix it, and fund it,” tweeted FCC Commissioner Geoffrey Starks. S-1625 “addresses these issues -- lets get this done.” The Competitive Carriers Association and Telecommunications Industry Association praised Wicker and the other senators for filing S-1625. Senate Commerce Security Subcommittee Chairman Dan Sullivan, R-Alaska, and Sen. Ed Markey, D-Mass., also signed on as co-sponsors.
The topic of supply chain security got hotter with Wednesday’s presidential executive order that could mean rules banning some companies from the U.S. supply chain, speakers said a U.S. Chamber of Commerce Global Supply Chain Summit Thursday (see 1905150066). China is starting to fire back.
Satellite groups sought changes to export controls related to a Trump administration effort to revive the National Space Council, in comments that were due Friday. The Aerospace Industries Association asked the Commerce Department for more time before space-related export control regulations, to allow for "open discussions with the government." AIA lacks an "industry consensus" on multiple changes being considered. The association said a member-company asked that Commerce “evaluate” the list and “expand the list of parts and components that do not pose a threat to National Security and Regional Stability.”
The partial government shutdown delayed Commerce Department work on tech export controls, Bureau of Industry and Security officials told an event hosted by the American Bar Association Monday. A Nov. 19 Federal Register notice had sought comment by Dec. 19 “for identifying emerging technologies that are essential to U.S. national security,” with categories including artificial intelligence and machine learning technology. Director Hillary Hess of the BIS regulatory policy office said “we are behind where we thought we were gonna be.” BIS' Kirsten Mortimer and others also cited the number of submissions. Mortimer said BIS received 231 comments, including 215 pages of suggestions on robotics and 220 pages on “position, navigation and timing” equipment. “The shutdown was really not our friend,” Hess said. “We’re just really trying to scramble and get everything organized.”
CTA fears “unilateral” export controls over emerging technologies “can seriously undercut U.S. technological leadership,” it told the Commerce Department’s Bureau of Industry and Security Thursday in docket BIS-2018-0024. CTA’s comments put it squarely in agreement with other tech groups that told BIS that overly strict export controls on new technology like artificial intelligence could harm tech innovation and bolster bad actors like China (see 1901100032). If the American tech industry is “locked out,” whether by “law or perception,” from pursuing “high growth markets” for “cutting-edge technologies,” U.S. companies “will lose the jobs and research investments that grow from our ability to compete for business in these fields,” said CTA. BIS should stick to the “principles” based in the 2018 Export Control Reform Act “as it considers whether or which technologies to propose for control,” it said. In deciding which emerging technologies should be targeted for controls, identify only those “not now controlled and that are essential to the national security” of the U.S., it said. It said any proposed controls should “be limited to addressing national security concerns, not trade policy issues.” CTA also urged the Trump administration to “give great weight to industry statements regarding how a proposed unilateral control would help or harm their U.S. business.” Don't "propose or impose new emerging technology controls unless it has fully considered the impact such controls would have on the U.S. economy,” CTA urged BIS. The Computer & Communications Industry Association suggested patented and patent-pending technology be excluded from export administration regulations. “A poorly executed export control regime can hinder innovation” and next-generation tech, CCIA said.
The Commerce Department shouldn’t support overly strict export controls on new technology like artificial intelligence that could harm tech innovation and bolster bad actors like China, industry groups commented. The Bureau of Industry and Security published an advance NPRM in November, seeking comment by Thursday on potentially tighter export controls in docket 2018-25221. The department is exploring technology for conventional weapons, intelligence collection and weapons of mass destruction, including AI and machine learning (ML), microprocessors, advanced computers, data analytics, quantum computing, robotics and advanced surveillance.
ZTE signed an agreement with the Department of Commerce that will mean the department's seven-year ban on U.S. companies selling telecom software and equipment to the Chinese company can end as soon as ZTE deposits $400 million in escrow to cover future violations of U.S. sanctions, the agency said Wednesday. The payment was in a deal last month to impose alternative conditions to replace the ban, which Commerce's Bureau of Industry and Security originally announced in April (see 1804170018). Commerce will suspend the ban during a 10-year “probationary period” in exchange for the company's agreement to pay $1.4 billion and other concessions. BIS can reactivate the ban if ZTE again violates sanctions during its probation. “Once the monitor is selected and brought on board, the three-pronged compliance regime ... will be in place,” the department said in a statement. “The ZTE settlement represents the toughest penalty and strictest compliance regime the Department has ever imposed in such a case.” Commerce's advancement of the deal came as Congress begins reconciling the House and Senate-passed versions of the FY 2019 National Defense Authorization Act (HR-5515), which contain differing anti-ZTE provisions (see 1806190051). Senate Minority Leader Chuck Schumer, D-N.Y., and Intelligence Committee Vice Chairman Mark Warner, D-Va., criticized moving forward with the deal. It's “a direct betrayal of President [Donald] Trump’s promise to be tough on China and protect American workers,” Schumer said: Trump "gave away the store to China for nothing, so now it’s entirely up to Congress to right the administration’s wrong. I hope my Republican colleagues in the House and Senate will do the right thing and maintain the Senate’s strong language in [HR-5515] that reverses the administration’s awful ZTE deal.” Warner called it a “sweetheart deal” that “not only ignores these serious issues, it lets ZTE off the hook for evading sanctions against Iran and North Korea with a slap on the wrist.”
Capitol Hill moved forward on legislation aimed at limiting President Donald Trump's ability to lift or otherwise weaken a Department of Commerce-imposed seven-year ban on U.S. companies selling telecom software and equipment to ZTE, despite the department's announcement earlier Thursday it had reached a deal on an alternative punishment. Senate Minority Leader Chuck Schumer, D-N.Y., and other lawmakers blasted the deal or viewed it with skepticism, while other insisted they would need to hear more from the White House. Commerce's Bureau of Industry and Security announced the seven-year ban in April (see 1804170018). Trump faced criticism and threats of legislative action since he first explored lifting the ban last month (see 1805140062, 1805220057, 1805230058, 1805240064 and 1805250059).
President Donald Trump’s tweet Sunday saying the administration is working with the Chinese government to keep Chinese equipment maker ZTE in business doesn’t offer relief for wireless carriers concerned that they may have to replace such gear if Congress or the FCC imposes a ban. “President Xi [Jinping] of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast,” Trump tweeted. “Too many jobs in China lost. Commerce Department has been instructed to get it done!” Industry officials said concessions to ZTE likely mean the Chinese company could continue to get components from U.S. companies like Qualcomm, but don't mean U.S. carriers won't have to stop buying equipment from ZTE or Huawei.