Home Consumer resources Commerce lacks intelligence resources to prevent US tech from fueling Chinese cyber threat, experts warn

Commerce lacks intelligence resources to prevent US tech from fueling Chinese cyber threat, experts warn


Written by Suzanne Smalley

The Commerce Department unit that approves exports of sensitive technology to the United States lacks the intelligence resources to fully realize the national security implications of selling advanced equipment and software to China, officials said. several experts and a former agency manager told CyberScoop.

These critics are particularly alarmed by the high percentage of technology approved for the Chinese market and question whether the Bureau of Industry and Security has the personnel and connections to the intelligence community to carry out its mission of safeguarding the national security of the United States and the protection of economic interests.

Last year, for example, BIS approved 86% of all technology export licenses, which a number of experts say is far too high given the national security issues at stake, as many technologies have potential military uses. And several experts have estimated that the unit has approved about 90% of all export licenses for technology sales to China over the past decade.

“They could use better intelligence, there’s no doubt about that,” Derek Scissors, senior research fellow at the American Enterprise Institute, told CyberScoop. “They didn’t make the transition to China being a national security issue.”

The Biden administration recently made a series of policy decisions aimed at protecting US national security in response to what it describes as the growing technological and cybersecurity threat posed by China. Last month, the administration signed legislation that earmarks $50 billion to support the expansion of U.S. semiconductor chip manufacturing to reduce U.S. reliance on Chinese-made chips. . Reuters reported last Thursday that the White House will expand bans on US exports of semiconductors used to advance artificial intelligence technology and chip-making equipment next month.

But critics say the BIS is a weak link in US efforts to compete with China on technologies such as artificial intelligence, chipmaking and other core technologies that also play a fundamental role in national security. . “The weaker our industries – semiconductors, telecommunications, critical minerals and rare earth elements, high capacity batteries, pharmaceuticals and medical equipment – the more our national security is threatened,” said Nazak Nikakhtar, former BRI chief, in June during a Senate Intelligence Committee hearing.

Nikakhtar, who now leads the national security practice at law firm Wiley Rein, told lawmakers that the trade has ignored the threat posed by China for too long, leading to “vulnerabilities in the supply chain on hundreds of critical products, ranging from the manufacture of semiconductors and electronics to the development of active pharmaceutical ingredients.

She testified that as the former head of the Commerce Department’s Committee on Foreign Investment in the United States, which screens foreign investment for national security reasons, her team was “completely in the dark, our community of Intelligence didn’t have adequate information, and I was frequently in the office until three in the morning using whatever open source information I could to get the ultimate beneficial owner.

The message from critics that the BRI needs to strengthen its intelligence capabilities has led to action in Congress. The The Intelligence Authorization Act 2023 includes a provision for the Director of National Intelligence to implement a pilot program to “assess the feasibility and desirability of providing the Department of Commerce with intelligence drawn from open source, publicly available and commercially available information to support export control and investment screening functions of the ministry”. “The layout should pass.

A spokesman for Senate Intelligence Committee Chairman Mark Warner, D-Va., said the committee added the provision to enhance intelligence support for business activities “essential to the states’ economic and national security.” States, such as export controls and the Entity List”.

The BRI also recognized that it needed to increase its staff. Its leaders recently asked Congress for nearly $200 million in discretionary spending and 593 positions to achieve its goals, according to his budget request for fiscal year 2023. The office currently employs 448 people, with nearly all of them working on export administration and enforcement.

Still, BRI defended its current work and told CyberScoop that it already works closely with the intelligence community, including through “direct access” to its information.

“As the threat environment has evolved with respect to nation-state threats, new technologies, and a growing range of contested areas, we are constantly working to strengthen these relationships, bring in additional resources, and leverage all sources of information to meet our critical and expanding mission,” Commerce Undersecretary for Industry and Security Alan Estevez said in a statement to CyberScoop.

A Commerce Department spokesperson pointed to the Office of the Director of National Intelligence’s pilot project as an example of the agency’s work to bolster intelligence-gathering efforts. The ODNI declined to comment because legislation creating the pilot program with BRI has not yet been passed.

But critics say just looking at the number of BIS-approved technology exports is alarming. The United States exported $125 billion worth of goods to China in 2020 and BRI officials demanded a license for less than half a percent, according to a Wall Street Journal analysis of Commerce Department data. Of that fraction, the agency approved 94%, or 2,652, of the applications it received for technology exports to China that year, the Journal reported. (Some experts say that since companies typically don’t apply for licenses when they know they’re going to be rejected, the data shows an artificially high number of approvals).

Kevin Wolf, an attorney at Akin, Gump, Strauss, Hauer & Feld, led BIS for seven years under the Obama administration and said the agency needed to act more aggressively than in the past.

“Export controls need to be thought about and used more broadly than has traditionally been the case in response to China’s goals of acquiring and using technology,” Wolf told CyberScoop, arguing for substantial funding increases. “I don’t think it’s really a debate anymore.”

But Wolf said it would be important to manage that change in partnership with U.S. allies, a process he said will take time and a lot of effort. Even once there is more funding, it can be difficult to find subject matter and technology experts to do the necessary analysis, he said.

Other analysts have pointed out that the BIS needs more Chinese language experts. “For BIS, both in terms of enforcement and new registrations, a lack of Chinese language capabilities can really hamper investigations,” Emily Weinstein, a researcher at the Center for Security and Emerging Technologies, said via email. of Georgetown.

Overall, the Commerce Department’s role in the national security bureaucracy is “probably still opaque to much of the IC,” said Gavin Wilde, a former National Security Agency official. who is now a senior fellow at the Carnegie Endowment for International Peace. “As the administration increasingly relies on the BRI to counter and compete with its adversaries, it would make sense to deliberately enhance Commerce’s stature and presence as an IC partner and consumer, in addition to suspects usual.”

Jon Bateman, another senior fellow at Carnegie, said that today trade and the BRI are more central to US foreign policy than ever before.

“If we accept that China is a key competing great power and the main bilateral challenge, and a lot of that challenge is about this complicated economic relationship and this technological competition that cuts across the military dimension, the economic dimension and the informational dimension “, did he declare. , “one could argue that the BRI is at the center of US foreign policy, decision-making, and action.”