Republicans are pushing for stricter controls on exports to China, citing lax enforcement of current measures.
Rep. Michael McCaul (R-TX), the new chairman of the House Foreign Affairs Committee, warns that the Chinese military could easily access sensitive technologies without better protections.
On January 13, McCaul sent a letter (pdf) to the U.S. Commerce Secretary Gina Raimondo to further request licensing data that the Commerce Department’s Bureau of Industry Security (BIS) had granted to China.
The appeal resurged after the BIS had failed to provide requested documents to the committee in response to the similar plea issued more than two years ago, the letter stated.
The lawmaker noted that the agency had only “produced one small tranche of documents to date in May 2021—more than six months after the initial request—and provided nothing further since then.”
Before the most recent request, the lawmaker placed another similar one in early November 2022.
The move came after the Biden administration issued sweeping new export controls on Oct. 7, 2022, in an effort to hamstring the Chinese Communist Party’s (CCP) military modernization.
Among those rules is a measure to cut China off from certain advanced semiconductor chips made with U.S. technologies, regardless of whether the chips were manufactured in the United States.
In the statement following the November request, McCaul reiterated that “the licensing data will enable Congress to assess how the BIS is implementing the controls and determine the effectiveness of the rule enforcement in preventing China from misappropriating U.S. critical technology.”
“By receiving this information, we can assess whether the spirit of these rules is being implemented effectively or undermined by an overly lax licensing process,” McCaul said.
Under the new rules, the BIS must accept or reject requests for licenses from American tech firms to sell their equipment to China after adding Chinese firms like semiconductor producer SMIC or telecom giant Huawei to its export control list.
McCaul said that the committee sought information about the number of licenses that had been refuted.
“How many licenses were declined, and where did they go?” McCaul asked while speaking with Defense News in a hallway interview on Capitol Hill last week.
He pointed to a six-month summary of BIS’ China export controls provided by the agency back in 2021, deemed “concerning” by Republicans.
“It showed that less than 1 percent [of licenses] were declined and $60 billion went into Huawei and $40 billion went to SMIC,” McCaul said.
The China Academy of Engineering Physics (CAEP), a state-run institution that focuses on the testing, development, and research of nuclear weapons and related sciences, has gained access to U.S.-made semiconductors even though such institutions have been banned from making similar technological procurements for more than two decades, The Wall Street Journal recently reported.
CAEP is said to have bought sophisticated American chips at least 12 times during the past two-and-a-half years.
“Our government doesn’t have time to complain that these problems are tough. We need solutions,” McCaul said in the statement, referring to the revelation.
Another batch of data on export control approvals arriving at Congress last week is now under review by the committee.
According to the GOP lawmaker, the subsequent finding would prompt potential legislative reforms to the BIS’s export control list.
“We do want a reporting requirement because they never report to the public on export licenses,” said McCaul.
“We want a full accounting of that.”
In the January letter, he said that “BIS’s dereliction in providing basic transparency and accountability” would spark his forthcoming 90-day review.
“A principal objective for this review is to determine if the Department of Commerce should continue to lead implementation of the export control system,” he stated.
The extent of any legislation that arises from McCaul’s three-month review period could be influenced by the bureau’s ability or unwillingness to provide a complete accounting.
With export control regimes currently splitting between the State Department’s munitions list and the Commerce Department’s dual-use items list, there has been discussion about whether “there should be one single licensing agency,” according to a Republican staffer from the committee.
“Part of what we’re looking to do is figure out if the existing system is the best arrangement or if it should wholesale be put somewhere else or if different aspects of the export control system should have different agencies as the lead,” the staffer told Defense News.
“Whatever rule we come up with, the [People’s Republic of China] is going to try to find ways around it,” the staffer added.
“It’s one of those things where it’s somewhat neverending.”