McCaul Seeks BIS Licensing, Operating Info in Oversight Push of New Chip Controls
The top Republican on the House Foreign Affairs Committee is asking the Commerce Department to provide its licensing data and communications with chip companies, along with a broad swathe of related information, to make sure the agency is implementing its new China controls “fairly across all market players.”
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Export controls are “only as strong as their licensing policy,” Rep. Michael McCaul, R-Texas, said in a letter this week to Commerce Secretary Gina Raimondo. He said Congress “needs access to this licensing data to assess how” the Bureau of Industry and Security is implementing the new set of sweeping controls announced last month, which introduced new license requirements aimed at restricting China’s ability to acquire advanced computing chips and manufacture advanced semiconductors (see 2210070049).
McCaul said Commerce and BIS should provide Congress with “all documents and communications,” including is-informed letters and other “correspondence,” sent to U.S. and foreign entities related to the new rules. The agency should “explain in detail why some firms that have products in the market or under development appear to have received letters but not others,” McCaul said. “Why do some firms appear to have certain carve outs and grace periods and not others?”
In September, before the most recent China chip controls were announced, BIS said it had sent is-informed letters to specific companies restricting their ability to export certain artificial intelligence-related chips to China (see 2209160025). NVIDIA said it received a letter, and AMD reportedly did as well 2209010059). A spokesperson for Intel declined to say whether the company received an is-informed letter, but noted that it received a one-year authorization to continue its NAND memory chip operations in Dalian, China. Several other U.S. chip companies, including Qualcomm, didn’t respond to requests for comment.
McCaul also said Commerce should provide a “detailed description” of how its is-informed practice works, including how the agency decides who should receive the letters, whether the letters are for firms already under other license agreements, and whether a technology must already be in China or “be poised for export to” China for a company to receive a letter.
McCaul also asked the agency to provide “documents sufficient to show the legal and regulatory authorities that establish the mechanism in which BIS may use an ‘is informed’ letter,” including any “standard operating procedures” the agency follows when crafting a letter. He asked whether BIS gives firms a time frame in which they must apply for a license after receiving the letter, establishes a time frame to review the application and requires an is-informed letter recipient to provide a list of its customers in China. If BIS requires the recipients to provide a list of its end-users in China, McCaul asked the agency to provide it with those lists related to letters sent involving the new China chip rules.
The lawmaker also requested a range of licensing data for export applications submitted under the new controls, including the names of the entities submitting applications, the Export Control Classification Number for the item being exported, a description of the item, names of end-users, a value estimate for the license application, the duration and terms of the license and adjudication information. BIS also should provide information on what other agencies were “consulted” on commodity classifications, a voting breakdown on licensing decisions by each agency, and the administration's “rationale for granting or denying an authorization or license.”
McCaul also seeks information on data BIS has “regarding U.S. operations, sales, and technology licensing and transfer in China that involves high-end graphics processing units.” The lawmaker specifically asked for how those operations in China support the “development, production, distribution, or refurbishment of high-end chips;” how many U.S. companies operate or use Chinese facilities involved in these activities; and all BIS approvals for "instances in which technology was considered EAR99 and no license was required, to establish these operations and facilities.”
He also asked for “detailed information” on a “monthly basis” of the instances of end-use checks performed for Chinese companies, including those on the Unverified List, since the authorized operation was established. BIS should provide the date and end-use check was requested and conducted; “each instance” in which the host government prevented the end-use check; the name of the end-user; a summary of end-use check findings; and whether the defense, state and energy departments agreed with BIS’s findings. Along with the new chip controls, BIS announced a new process that will allow it to move companies from the UVL to the more restrictive Entity List if they don’t allow BIS to conduct an end-use check within 60 days of being placed on the UVL (see 2210070006).
McCaul asked BIS to provide responses by Nov. 15 and “on a continuing basis every 30 calendar days thereafter.” A BIS spokesperson didn’t comment. The lawmaker last month said he plans to initiate a formal review of the agency and its export control procedures if Republicans retake control of the House after the midterm elections (see 2210030068).