The Commerce Department on Thursday issued a new round of export controls on advanced quantum, semiconductor and additive manufacturing technologies that includes a novel license exception for countries deemed to have comparable controls.
Cooperation within three of the four multilateral export control regimes in which the U.S. participates has been hampered since Russia invaded Ukraine in 2022. Russia is a member of those three regimes, most notably the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies. That and the other two operate largely by consensus, allowing Russia to stymie new controls.
In issuing new controls on quantum computing items, advanced semiconductor manufacturing equipment, gate all-around field-effect transistor technology and additive manufacturing items, DOC’s Industry and Security Bureau will form a new category within the Export Administration Regulations that lists which products destined for specified partner countries are eligible for more lenient licensing procedures. The “License Exception Implemented Export Controls (IEC)” is for countries that “have implemented equivalent technical parameters for these items in their export controls that substantially align with those implemented by the United States,” according to a draft interim final rule scheduled for publication in the Federal Register on Friday.
“Several like-minded countries have already announced or implemented new national controls for export of items under their jurisdiction related to quantum computing and advanced semiconductor manufacturing. We anticipate additional countries will implement similar controls soon,” BIS said in a statement on Thursday. “This unified approach, built on a foundation of shared values and security interests, enhances the effectiveness of our controls. Continued international collaboration in advanced technologies is paramount to national security. For this reason, this IFR establishes a new [IEC] so that countries may meet the terms of IEC by implementing equivalent national controls which would eliminate the need to submit license applications for those items, thereby fostering innovation opportunities among implementing countries.”
The IEC list includes 24 products identified by their export control classification numbers alongside the countries eligible to import the products without having to submit export license applications. Eight countries -- Italy, the United Kingdom, Australia, Canada, France, Germany, Japan and Spain -- and the U.S. appear on the list, with each item having some combination of those countries listed as eligible destinations. For instance, Germany, Italy, the United Kingdom and the U.S. are listed as eligible destinations for cryogenic wafer probing equipment -- ECCN 3B904.
Presumption of denial
The interim final rule also imposes a presumption-of-denial licensing standard for all items that BIS controls for national security purposes destined for countries the agency has labeled as national security concerns -- Country Group D:1 -- and countries with which the U.S. has an arms embargo, or Country Group D:5. Country groups D:1 and D:5 feature 38 countries in total, including China, Iran, Nicaragua, North Korea, Russia and Venezuela.
National security-controlled items destined for Country Group A, which includes countries in one of the four multilateral export control regimes or eligible for the License Exception Strategic Trade Authorization, will be considered under a presumption-of-approval, per the draft rule. License Exception STA is for specified items destined for low-risk destinations. Licenses for national security-controlled items to any country not in Country Group A, D:1 or D:5 will be evaluated on a case-by-case basis, according to the interim final rule.
BIS’ licensing policy has been subject to intense congressional scrutiny as many Republicans believe it has been too lax, resulting in China’s acquisition of sensitive U.S. technologies. Several lawmakers, most recently Sen. Marco Rubio (R-FL), have called for BIS to adopt a blanket presumption of denial for all export license applications for items destined for China.
Deemed export exception
BIS also will establish a general license that allows deemed exports -- defined as the sharing of controlled technology with a foreign person -- with people whose most recent citizenship or permanent residency is listed in Country Group D:1 or D:5. “The domestic development of quantum information science and technology (QIST) experts, including in quantum computing, is insufficient to fill the United States’ QIST strategic goals,” the interim rule says. “The United States will continue to rely on foreign talent to fill critical workforce gaps.”
Most QIST degrees are conferred to temporary U.S. residents, it notes, and “offshore companies are becoming increasingly attractive places to pursue a career in quantum computing, driven both by increases in public and private investments internationally, but also uncertainty in the ability to work in the United States due to immigration policies.”
“While the license requirements for deemed exports and deemed reexports of quantum technology and software only apply to foreign persons whose most recent country of citizenship or permanent residency is a destination specified in Country Group D:1 or D:5, this hardship would be devastating to the continued progress of future developments in the quantum field, which depends on foreign person employees from these destinations,” it continues.
The interim final rule will take effect immediately upon publication in the Federal Register. Comments on the rule are due 60 days later.