US Should Remove Outdated Export Controls, Trim Entity List, Think Tank Says

The report pointed to several steps the Biden administration has taken over the last year to tighten restrictions on advanced technologies -- such as its new chip export requirements (see 2311060067) and its upcoming outbound investment prohibitions (see 2310050035) -- and said those efforts should be paired with a push to de-control less sensitive items that foreign “adversaries” can easily buy from other countries.

The manufacturing capabilities of countries of concern have “progressed significantly,” CSIS argued, and many of the items on BIS’ Commerce Control List are “already within reach" of countries subject to strict U.S. license requirements. “In short, an expansion of controls at the high end of technological advancements demands adjustments at the low end,” according to the report, written by CSIS experts Bill Reinsch, a former BIS official, as well as Thibault Denamiel and Eric Meyers.

If the U.S. doesn’t delete its outdated controls and instead the “universe of U.S. controls expands,” the think tank warned, U.S. companies will lose out on much-needed revenue to develop next-generation technologies, “ultimately making the United States less competitive in these sectors.”

BIS should first remove items from the CCL that require “less technical know-how” and are strictly used for human health or safety, such as life jackets, fire extinguishers, emergency lighting and more, the report said. Although some of those items are used in goods that have military applications aircraft and ships, CSIS said they can be “easily manufactured” by countries of concern, and mostly provide safety features as opposed to “offensive capabilities.”

The think tank said export controls on these items impose “undue enforcement burdens and needless compliance work for domestic firms. Given today’s imperative to focus on critical technologies, these items are not necessary on the CCL."

The think tank suggested removing these items, controlled under the following Export Control Classification Numbers:

• Life jackets and compasses under ECCN 8A992
• Emergency lighting, lavatories, public announcement systems, potable water tanks under ECCN 8A609
• Fire extinguishers, flame and smoke/carbon dioxide detectors, lavatories, life rafts, PA systems, underwater locator beacons, urine collection bags, pads, cups and pumps under ECCN 9A610.

BIS also should consider loosening licensing requirements for a range of other items, including “thinner polyimides” with fewer uses in dual-use technologies. It should also loosen controls for domestic lidar technologies -- a remote sensing method that uses a laser to measure distances -- which would allow U.S. companies to better compete with Chinese firms.

While BIS should continue limiting “adversarial access” to certain microelectronics, machine tools, military gas turbine engines and unmanned drones at “the cutting edge,” the agency should also “relax controls in areas where China has already matured its domestic alternatives.” The agency should make sure it coordinates these moves with allies, CSIS said.

The think tank suggested loosening certain controls for these items, controlled under the following ECCNs:

• Polyimides under ECCN 1C008
• Field Programmable Gate Arrays under ECCN 3A001
• Radiation-hardened electronic components under ECCNs 4A001 and 4A101
• Machine tools under ECCNs 2B001
• Unmanned Aerial Vehicles under 9A012 and 9A120
• Military gas turbine engines under ECCN 9A619
• Lidar under ECCN 6A998.

The report’s authors also said BIS should trim the Entity List by removing companies that may no longer meet the “updated criteria informing placement.” The interagency End-User Review Committee, which reviews additions and removals from the list, reportedly hasn’t “conducted its mandated annual review weighing potential Entity List removals in a decade,” CSIS said, adding that BIS should restart annual reviews to “ensure the Entity List is as tight as possible.”

It also suggested loosening some guardrails for exports to countries of “growing geopolitical importance,” such as Vietnam and Moldova, because of their “proximity and relationship to countries of concern.” CSIS said the U.S. should be pursuing closer security ties with both countries and should treat them as such under the EAR, including by adding both to Country Group B, which would make both eligible for additional export license exceptions. Both are currently in Country Group D.

“Recent BIS updates show that changes in country listings are already underway to reflect the changing security environment more accurately,” CSIS said. The agency added Ukraine to Country Group B in 2020 (see 2012230063)

The think tank also warned that increased use of BIS’ Foreign Direct Product Rule -- which places export licensing requirements on certain foreign-made items made with U.S.-origin technology or software -- may “stretch enforcement demands beyond” the agency’s capabilities.

“Before Washington continues to expand these rules to rein in the access of countries of concern to emerging technologies," CSIS said, "U.S. policymakers should carefully consider the government’s ability to enforce them.”