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SBC Hearing on Oversight of the Bureau of Industry and Security

Senate Committee on Banking, Housing, & Urban Affairs

Advancing National Security and Foreign Policy Through Expert Controls:

Oversight of the Bureau of Industry and Security

Thursday, July 14, 2022

Topline

  • Senators on both sides of the aisle cited the economic and national security threats posed by the shortage of semiconductors and urged passage of USICA.
  • Both the Chair and Ranking Member spoke against including an outbound investment provision in the USICA/America COMPETES conference bill. 

Witnesses

Opening Statements
Chairman Sherrod Brown (D-Ohio)

In his opening statement, Brown discussed Russia’s invasion on Ukraine and lauded the Bureau of Industry and Security’s (BIS) efforts to siphon off Russia’s access to military material and technologies. Brown also noted the economic and national security risks stemming from our dependency on China and urged swift passage of the United States Innovation and Competition Act (USICA). 

Ranking Member Patrick J. Toomey (R-Penn.)

In his opening statement, Toomey urged BIS to advance American national security interests without harming economic interests. Toomey criticized the Biden Administration’s support for an “outbound” Committee on Foreign Investment in the U.S. (CFIUS), a potential new agency that he described as having unchecked authority to regulate activity of companies in certain countries. He concluded by discussing the opposition to the inclusion of outbound CFIUS in USICA. 

Testimony

The Honorable Alan Estevez, Under Secretary for Industry and Security, Department of Commerce

In his testimony, Estevez reaffirmed that his primary goal was to prevent malign actors from obtaining technologies that could be used against the U.S. He highlighted the efficacy of the export controls BIS placed on Russia and Belarus following the invasion of Ukraine. Estevez also emphasized the Bureau’s commitment to addressing strategic competition with China and working to develop an export control framework for the digital age.

Question & Answer

Recommendations

Sens. Catherine Cortez Masto (D-Nev.) and Brown asked Estevez which additional authorities or resources he needed to address the threats posed by China. Estevez replied that he was not missing any authorities but could use more technologists, additional enforcement officers, and a larger budget to access more tools. He then noted the existence of a control that stops U.S. persons from supporting the Chinese military and added that the control should be expanded to include the Chinese intelligence community and surveillance community. He concluded that legislation served a narrower purpose than intended.

Sen. Elizabeth Warren (D-Mass.) noted the Trump Administration transferred the jurisdiction of export licenses for weapons from the Department of State to the Commerce Department. She said that BIS and Commerce should not be shipping assault weapons overseas and cited President Biden’s unfulfilled campaign promise to return this control to the State Department. Warren noted the 30 percent increase in weapons exports since the transfer of jurisdiction to Commerce, and pointed out that Commerce only denied less than half of 1 percent of applications to export assault weapons overseas. She urged Commerce to follow the President’s stated human rights objectives for foreign policy. 

Concerns

Sen. Thom Tillis (R-N.C.) asked if there were any proposals before the current Congress that Estevez was concerned about. Estevez replied that their interagency process worked very well, and that it needed to remain that way. He cited proposals to make the first discussion on a licensing decision public record.

China

Toomey asked Estevez if BIS has the authority to block the transfer of any kind of technology, even if a U.S. company entered into a joint venture with a Chinese company, to China. Estevez said yes. Toomey then asked Estevez if BIS had sufficient authority to control the transfers of sensitive American technology to China. Estevez said they did. Sen. Steve Daines (R-Mont.) asked Estevez what BIS was doing to ensure high-tech and national security intellectual property was not ending up in the hands of the Chinese government. Estevez said BIS had cutoff points in place for the highest tech semiconductors and is undertaking a complete review of those policies.

 

For more information on this hearing, please click here.

For an archive of past SIFMA hearing coverage, please click here.