Commerce Delays on Tech Controls Frustrate Industry
As the State Department plans guidance for exports of surveillance technology, companies and associations are concerned about consequences of separate Commerce Department efforts to restrict sales of emerging technologies. The stakeholders said in interviews in recent weeks they're growing impatient with a Commerce delay of several months. State will publish its surveillance export guidelines by early January and will make changes based on industry comments, an Information Systems Technical Advisory Committee meeting was told Wednesday.
State changes will include eliminating a “kill switch” suggestion and revising the definition for “surveillance,” which some companies called overly broad. State Department Foreign Affairs Officers Jennifer Stein and Lana Salih plan to address industry concerns. “You’re not mandated to follow this guidance,” Salih told the advisory committee. “It’s something that we’re putting out voluntarily so that businesses can conduct good business.”
Salih said her department is pursuing the recommendations because of rising “misuse” of surveillance tech and lack of guidelines. “The timing is right,” she said. “There hasn’t been any guidance on how businesses should analyze human rights concerns associated with exports of items.” Draft guidance proposed in “privacy by design” a kill switch integrated into products that could be used to remotely deactivate devices. “There was a strong opinion on the kill switch, so we outright deleted that,” Stein said. The Information Technology and Innovation Foundation called parts of the draft “troubling” and “overly broad” (see 1905200028).
Commerce received more than 200 comments about its proposed restrictions on sales of emerging tech. Most warned against overbroad controls. Technology and auto industry representatives told us they think Commerce will heed their recommendations. But the prolonged wait and the prospects of strict controls left them preparing for the worst, they said, increasing industry uncertainty.
Nearly a year after the department's advance notice of the tech review, some companies are confused about the delay and fear the controls won’t be fully coordinated with U.S. allies, causing customers to seek foreign sellers. The lateness is said to be hurting business planning and R&D. “It’s having a chilling effect,” emailed Jim Hendler, chair of the Association for Computing Machinery technology policy committee. “Without knowing which aspects of which technologies will fall under what restrictions makes the future very uncertain.”
Officials at Commerce's Bureau of Industry and Security, the agency in charge of the controls, are described as growing frustrated with a slow interagency review process that's partially causing the delay. A Commerce spokesperson emailed that the agencies “continue to review the information we received.”
A Republican House staffer said there's tension between Commerce and State over the extent of controls for emerging and foundational technology. Commerce officials expect to request industry comments on foundational technologies before the end of the year. “I think the Commerce Department has difficulties getting its head around what it has been asked to do and to come up with sensible proposals,” said Spencer Chilvers, chairperson of the U.K.-based Export Group for Aerospace, Defence & Dual-Use.
“They’re far more difficult to get your brain around" than anything he had done at Commerce, said Kevin Wolf, a former assistant secretary-export administration and now Akin Gump trade lawyer, who called the controls intellectually challenging. The task may be stretching knowledge and resources of some officials, said Chris Padilla, former undersecretary-international trade now at IBM. The administration may not employ many quantum-computer experts, Padilla said. “This is really hard,” he said. “It takes a long time to get something like this right.” Padilla thinks “there is a lot of interagency disagreement” on how the controls should be proposed.
BIS is operating without an official leader. Nazak Nikakhtar, then acting undersecretary, resigned in August as she awaited Senate confirmation. The position wasn't filled. Commerce declined to comment on this. Matt Borman, Commerce’s deputy assistant secretary-export administration, and Rich Ashooh, assistant secretary-export administration, are primarily leading BIS, said Wolf, Padilla and other industry reps.
Ashooh, Borman and BIS colleagues "have a strong team and they’re highly competent,” said Michael Petricone, CTA senior vice president-government affairs. He said companies are concerned about the delay less because of BIS staff and more because “they crave certainty, and they want to know what the rules are. They want rational business planning.”