U.S. companies and trade groups applauded a recent Bureau of Industry and Security rule that expanded the agency’s export control exemption for certain standards-setting activities. They said the rule change will help remove licensing barriers that American officials face at international bodies while working on emerging technology standards. While the Technology Trade Regulation Alliance welcomed the rule changes, it said BIS should continue expanding the exemption to cover a wider set of technologies discussed in standards bodies involving the electronics, telecommunications and aviation industries. For example, the TTRA said BIS should harmonize its standards-setting-related controls with how it treats other information shared publicly, such as fundamental research. The rule “appears inconsistent with the BIS approach to other First Amendment protected commercial speech,” the alliance said. UL Standards & Engagement, a nonprofit standards development organization, and the Wi-Fi Alliance said the rule update will help their members more easily participate in standards bodies. The Wi-Fi Alliance specifically said the rule confirms that the type of standards-related activity its members are involved in “is not restricted by the Export Administration Regulations.” BIS issued rules in 2020 and 2022 that authorize releasing certain controlled technology for specific standards-setting activities, including when companies on the Entity List, such as Huawei, are participating in those bodies.
A disappointed Lumen is reviewing its options after the Washington Utilities and Transportation Commission rejected a proposed settlement between the company and UTC staff related to the state’s method of regulation, a Lumen spokesperson said Tuesday. The pact would have reduced regulation of the telco by classifying Lumen’s CenturyLink ILECs as competitive. In a 3-0 order Friday, the commission took issue with a proposed process for discontinuing service in challenging customer locations (CCLs), which the agreement defines as “an existing CenturyLink local service customer location in Washington that lacks both fixed internet availability from at least one provider at [25 Mbps download and 3 Mbps upload] speed or greater priced at $61.13 per month or less, and mobile wireless service at $61.13 per month or less.” Under the pact, CenturyLink would have to get UTC approval before discontinuing stand-alone residential or business exchange service to any area including a CCL. However, the commission agreed with concerns by the state attorney general’s public counsel office that “that the CCL definition is too narrow, and that the discontinuance process could leave some customers without adequate service.” The commission sought “broader protections and a more stringent approval process.” The UTC added that “CenturyLink, a profitable company that has previously accepted federal money to provide these services to customers needs to do more to meet the needs of its most vulnerable customers who would be affected by the inequities of this proposal.” The rejection means a “temporary extension” of the current alternative form of regulation (AFOR) scheme until parties can adjust the settlement and the commission can resolve Lumen’s Jan. 8 petition seeking competitive reclassification, said the order in docket UT-240029. CenturyLink has operated for nearly a decade under an AFOR in Washington state (see 2402060015). Lumen “worked closely with [Washington UTC] staff to reach a settlement creating a comprehensive new regulatory structure reflective of today’s competitive market,” said the company’s spokesperson. “The proposed settlement contained multiple levels of safeguards that ensured no CenturyLink customers would be left without service.”
China has a growing presence in telecom standards bodies like the 3rd Generation Partnership Project, but experts said the U.S. still has significant influence, during a USTelecom webinar Thursday. Experts agreed the election of American Doreen Bogdan-Martin as ITU secretary-general is important to the development of industry-led standards (see 2205110039). The President’s National Security Telecommunications Advisory Committee (NSTAC) is scheduled to vote at a May 24 meeting on a draft letter to the president on standards.
The Commerce Department’s Bureau of Industry and Security “continues to work with our interagency partners to apply consistently the licensing policies” included in a final rule “to restrict Huawei’s access to technology or software for activities that could harm U.S. national security and foreign policy interests,” a spokesperson emailed Thursday. Senate Commerce Committee ranking member Roger Wicker, R-Miss., pressed BIS Wednesday for details on its implementation of revised restrictions because he said he's aware of evidence of noncompliance (see 2108110066). “In addition to other EAR [Export Administration Regulations] license requirements that may apply to Huawei,” an August final direct product rule bars the company “and its affiliates” from “sourcing certain foreign-produced items from outside” the U.S. “without a license from BIS,” the spokesperson said. The agency “aggressively enforces” its rules “and takes allegations of potential export control violations seriously. All sources of information are leveraged to identify, investigate and, where appropriate, prosecute violations. Huawei reported a revenue decrease of almost 30% for the first half of 2021 compared to the first half of 2020.”
A Hollywood Hills, California, electrical engineer was sentenced Thursday to 63 months in federal prison for his role in a scheme to illegally export chips with military uses to China, in violation of the International Emergency Economic Powers Act and the Export Administration Regulations, said DOJ. Yi-Chi Shih, 66, was convicted July 2 and ordered to pay the IRS $362,698 in restitution for lying to the agency about his foreign assets, and also was fined $300,000. Shih defrauded a U.S. manufacturer of high-power broadband chips to gain access to the company’s confidential and proprietary business information, then used an accomplice posing as a domestic customer to buy the chips for U.S. use, said DOJ. “Shih concealed his true intent to export.” Attempts to reach Shih’s lawyers for comment Friday were unsuccessful.
The Commerce Department Bureau of Industry and Security loosened its license review policy for exports of certain drones controlled under export administration regulations. After similar action by the State Department in July (see 2007280006), this imposes case-by-case license review on certain unmanned aerial systems (UASs) rather than presumption of denial. The U.S. “remains committed to the goals” of the multilateral missile technology control regime, in which the drones are still controlled under a “strong presumption of denial,” but “rapid advances” in drone technology and “growing commercial uses” for UAS warrant loosened export restrictions, BIS ruled in Tuesday's Federal Register.
The Commerce Department's Bureau of Industry and Security renewed its temporary export control on certain artificial intelligence software, extending it a year from Jan. 6, said that day's Federal Register. BIS originally added the software to temporary controls under export administration regulations because it intended to propose it for multilateral control for the 2020 Wassenaar Arrangement. But Wassenaar’s annual plenary wasn't held last year due to COVID-19. BIS said the extension helps the U.S. “continue its effort at the Wassenaar Arrangement in 2021.”
The Commerce Department Bureau of Industry and Security's handling of emerging and foundational technologies drew rhetorical fire on a Center for Strategic and International Studies webinar. Experts said Friday the lengthy process is impeding Committee on Foreign Investment in the U.S. work. “It’s a hard list," said Wiley's Nova Daly of BIS work to come up with information on such technologies that need curbs when involving certain other countries. "Emerging technologies shift and change.” Putting controls on emerging and foundational technologies is "a requirement by law," the expert added. "It will help CFIUS do its job in terms of being able to make sure we don't lose those critical technologies.” The Foreign Investment Risk Review Modernization Act (FIRRMA) let CFIUS review transactions involving such tech. Because of some BIS delays in issuing those controls, CFIUS may not have a clear definition for what technologies to target, experts say. Making CFIUS partly dependent on BIS “was a really bad idea, and I think it needs to be re-looked,” said David Hanke, who helped draft FIRRMA and now is at Arent Fox. “There needs to be more agility, there needs to be more speed, the ability for [Treasury] to see something coming, and whether or not it's covered by BIS and the commerce control list, to be able to designate that in a quick manner.” Thomas Feddo, Treasury's CFIUS lead, cautioned critics from placing too much blame on BIS. “I'm not an export controls expert. I wish Commerce was here to defend themselves,” he said. “I think they might make some argument that they're making a great deal of progress.” Feddo said CFIUS doesn't necessarily need BIS to designate critical technologies for the committee to target transactions. BIS didn't comment Monday. A BIS spokesperson Friday pointed to its notice that day announcing six additional emerging technology controls. The agency hasn't issued foundational tech final controls (see 2008260013).
The U.S. needs to pour more resources into research and innovation of emerging technologies to boost commercialization and outpace Chinese technology development, said Sen. Marsha Blackburn, R-Tenn. She advocated for a methodical decoupling and reshoring manufacturing of critical technologies. “We have to realize that you can't just decouple from China and say, 'All right, we're severing.’ It is more like an unraveling,” Blackburn told the Hoover Institution Wednesday. “Whether it is critical supply chains for semiconductor chips or telecommunications equipment … we have become too dependent on China for manufacturing, and we need to return that capability and capacity to the United States.” The U.S. isn't investing enough in R&D, she said, and needs to form better partnerships between universities and corporations. Blackburn said “technology is going to be the nexus for so many areas of growth,” and the military needs to better innovate to compete with China’s civil-military fusion surrounding military applications for artificial intelligence and autonomous vehicles. “Our commercial sectors and our military sectors need to be innovating,” Blackburn said. “Our military complex needs to be utilizing the new concepts that are being pushed forward in the commercial area.” Blackburn said the U.S. can take steps beyond the Commerce Department's recently amending export administration regulations to let U.S. companies more easily participate in bodies in which Huawei is a member. She pointed to S-2528 to require the administration report on the “purpose, scope and means” of expanded Chinese influence on standards bodies. Friday, the White House, China's embassy in Washington and the Semiconductor Industry Association didn't comment.
The Commerce Department amended Export Administration regulations effective Thursday to allow U.S. companies to more easily participate in standards setting bodies in which Huawei is a member, says that day's Federal Register. Commerce, which recently announced the change (see 2006150062), seeks comments on the revision by Aug. 17.