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Spreadsheets vs. Smugglers: Modernizing the BIS for an Era of Tech Rivalry

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Spreadsheets vs. Smugglers: Modernizing the BIS for an Era of Tech Rivalry

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The Bureau of Industry and Security (BIS) is likely the most important federal agency you’ve never heard of. Buried deep within the U.S. Department of Commerce, the BIS works closely with industry to prevent the export of weapons of mass destruction and other sensitive technologies to America’s foreign adversaries.

The BIS’s importance to U.S. national security has grown markedly in recent years. Following the 2022 invasion of Ukraine, the BIS was called upon to help coordinate comprehensive, multilateral sanctions against Russia. That same year, new export controls were introduced to prohibit the sale of advanced AI chips and semiconductor equipment to entities in China. Yet despite these new and expanded responsibilities, the BIS’s budget for core activities has been essentially flat for over a decade when adjusted for inflation.

Congress’s underinvestment in export administration is one part policy inertia, one part willful complacency. Export licenses were a key tool for containing Soviet access to U.S. military technology during the Cold War, but ebbed in relevance after the Wall came down. The pendulum has only recently begun to swing back in light of China’s state-backed effort to dominate most major technology categories, with the BIS’s annual requests for export licenses doubling to 40,000 over the last 10 years.

Without new resources, the BIS is now at serious risk of becoming overwhelmed. As Matt Borman, the deputy assistant secretary of commerce for export administration, told the New York Times last year, “We spend 100 percent of our time on Russia sanctions, another 100 percent on China and the other 100 percent on everything else.”

Many government agencies can no doubt claim to be underfunded and overworked, but rarely with such dire consequences. Stagnant funding of the BIS’s enforcement capacity directly harms U.S. export industries while enabling smugglers to evade export controls outright. For example, earlier this year, an analysis of procurement records showed China’s military and state-run research institutes to have acquired controlled AI chips crucial for developing modern AI systems. And with forecasts suggesting the number of controlled AI chips destined for export will more than triple over the next three years, the enforcement challenges facing the BIS are about to grow rapidly.

Funding constraints hurt all the more given the unusual range of skills BIS analysts need to do their job effectively. Crafting sensible controls on AI chips demands staff with deep technical knowledge of the semiconductor supply chain, for example. Enforcing the chip controls, meanwhile, demands both expertise in China’s economy and the strategic acumen to play a continual game of cat and mouse. Yet according to a report from the House Foreign Affairs Committee, as of last year, the BIS had only one in-house Mandarin speaker (recently upgraded to two), and at one point “only employed one member of staff who could maintain and operate the Federal Register system.”

Many large multinational corporations now have bigger export compliance teams than the BIS has on the other side. This is not for lack of fiscal capacity. While the U.S. budget deficit is a serious concern, Congress could meet the BIS’s requests for additional funding—$223 million for FY2025, up from $191 million in FY2024—for one quarter of the cost of a single F-35 aircraft. Alternatively, as recommended by the House Foreign Affairs Committee, Congress could authorize the BIS to charge a modest fee for some export license applications, allowing its budget to grow and shrink with demand.

But what the BIS really needs more than anything is better technology. As it stands, BIS agents enforce export controls with what amounts to Google searches and giant spreadsheets. With the right investment, BIS’s enforcement capacity could be supercharged by leveraging machine learning and proprietary data sources to process license requests and spot supply chain anomalies in real time.

Despite gaps in policy and enforcement, export controls are having a real impact. Controls on AI chips have meant that Chinese AI labs lack full access to the computing power—a key driver of AI progress—that their U.S. competitors have, with the restricted supply of AI chips in China leading to inflated prices and speculation. Now is not the time to let off the breaks.

Policymakers across the political spectrum have a growing appreciation for the trade and technology dimensions to U.S. national security, but the current state of export administration falls far short of what is needed. To rebuild our capacity to enforce export controls at scale, Congress needs to grant BIS the resources it needs to modernize.

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