BIS Redux

March 29, 2021

I want to begin by mourning the passing of Bill Brock, a former U.S. trade representative and CSIS trustee, among many other things. Bill most recently served as co-chair of CSIS’s Commission on Affirming American Leadership, where his wisdom guided the commission throughout its work. He has consistently been a thoughtful, rational voice at a time when there seem to be fewer and fewer of them. He will be deeply missed.

I have spent a good part of my professional career on export controls, but I don’t often write about them in my columns. This week, though, I was inspired by a recent piece by Ana Swanson in the New York Times that reminded me, sadly, that some things never seem to change. The article discussed the Department of Commerce’s Bureau of Industry and Security (BIS), which people have suddenly realized is a central figure in the debate over technology transfer to China.

That revelation is not news to people in technology or national security sectors, and from the perspective of someone who used to run the bureau, it’s nice to see BIS getting the recognition it deserves. Unfortunately, with recognition comes controversy, although people with long memories have seen this movie before.

The current debate is over what kind of person should lead the bureau—a China hardliner or someone with closer ties to the high-technology industries affected by export controls. The argument of those who favor the former is that the bureau has been “captured” by the people it controls and is no longer protecting our security.

This argument has been made for at least 35 years, and, in fact, it led to BIS’s creation in the mid-1980s. At that time, it was part of the International Trade Administration, but senators believed that put it under the influence of the department’s export promotion people, so it was stood up on its own. I was one of the beneficiaries of that change, but I have always thought it missed the point. Making sure the bureau has a good working relationship with industry is essential to its success and does not have the downsides that worry people.

First, the process that was implemented in the Clinton administration and made more effective in the Obama administration is based on the idea that export control inevitably has security, foreign policy, and commercial impacts. The result was a process in which virtually all the licensing decisions involve the Departments of Defense, State, and Commerce, each reflecting one of the equities and thus making a thoughtful, balanced decision more likely. The process permits an unhappy agency to appeal a decision, all the way to the president if necessary, so the idea of a rogue Commerce bureaucracy riding roughshod over the Defense and State Departments is absurd.

Second, and more important, the process achieves its goal of protecting our security. There was a sea change in thinking about that which began with the Clinton administration. As advanced technology, particularly information and communications technology (ICT) and semiconductors became a more important part of war fighting, keeping up with rapidly improving technology became a huge problem for the military. The solution was, rather than relying on specially designed and produced items, the United States would obtain the latest state-of-the-art technology directly from the private sector.

That decision, however, turned thinking about export controls on its head. Defense purchases of ICT were never going to be a significant part of company sales—they made their money selling to the private sector, increasingly through exports. So, the Pentagon realized that most in their interest were healthy high-technology companies which continue to lead the world in innovation, from which the military could benefit. That inevitably meant permitting more exports because that’s where corporate profits were coming from. The result was a policy that permitted exports of older items a generation or two behind state-of-the-art but maintained tight controls on the newest stuff and the equipment used to produce it.

Implementing that policy involves walking a fine line between controlling too little, which allows our adversaries to obtain things we don’t want them to have, and controlling too much, which undermines our high-technology companies, cripples their research and development budgets, and slows down innovation. Walking that line necessarily means a close relationship with industry so that the government knows what is coming up in industry, what its problems are, and how specific control decisions would affect it. 

It also requires leadership that knows how to write rules that give clear guidance and minimize ambiguity. Details matter in this business, which is why the top jobs in the bureau appear in the Prune Book as well as the Plum Book. We saw how not to vet leadership in the last administration.

Finally, I am frustrated by the enthusiasm on both the left and the right for litmus tests in appointments. This has been most obvious in the financial sector, where the left is arguing that anybody who has worked on Wall Street should not be eligible for appointment. That means that anybody who knows something about that industry based on actual experience should not get a job. In other words, ignorance is better than competence. Working in an industry does not automatically mean one is captured by it. One could be, but one could also leave knowing how it works, including its strengths and weaknesses, and be a much better regulator as a result. 

That’s one reason why we have a Senate confirmation process for senior positions—to find out which it is. If we preclude people from consideration on the basis of their past experience, we dumb down the government and shortchange the people. That is particularly true of BIS, where decisions have serious consequences for our economy as well as our security. Important policy decisions on China are going to be made in the White House. What we need at the Department of Commerce are people who can implement them efficiently and seamlessly, and that requires good working relations with the affected parties.

William Reinsch holds the Scholl Chair in International Business at the Center for Strategic and International Studies in Washington, D.C. 

Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s). 

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