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7: BIS Update Conference Day 1 · Rittener Reflections

• Jeff (00:13) Hello, this is Jeff Ritner and thank you for joining me for a special three-part episode of Ritner Reflections. Today is March 18th and I am excited to publish a short podcast for the next three days where we will enjoy real-time daily report outs, analysis and insights from three export control experts who are attending the Bureau of Industry and Security's annual update conference being held this week in Washington, D.C. The Bureau of Industry and Security, known as BIS, holds this conference every year. They've done this for the past 36 years. And they always invite the export trade communities to join. And normally there's a thousand plus participants. I actually attended last year. I hadn't been in a number of years and I went last year and thoroughly enjoyed. They have plenary sessions, speakers, oftentimes from the most senior level. I believe this conference, they are actually going to have the Secretary of Commerce speak to the audience. They also will hold breakout sessions with very timely and appropriate topics on export controls that are important for the day. And so for the attendees, it's just a great time to get. kind of fed, if you will, from the latest information. And it's a great time for networking. In fact, that's probably the thing I enjoyed the most was seeing so many colleagues that you work with over time and over the years. So I am really excited they're holding this. I'm not attending this year. I happen to be here in North Carolina this week visiting my family. I am spending today, in fact, with my granddaughter who is having a very special birthday. And we are actually doing all the wonderful things you do on a birthday. But I did want to make sure that there was an opportunity to share with all of you the latest information from this conference. So joining me today will be three individuals who I highly. I've worked with all three over many, years, and each of them will bring a very unique perspective when they share their insights from the conference. First of all, I am thrilled to have Jose Vega join. Jose is a trade compliance specialist at Intel. He has been working in the field of compliance within the tech industry for over 20 years. I have known Jose for probably half of those 20 years working with him and I find him just a very practical practitioner. He understands trade very well and I understand. may be his first conference, so it'd be really exciting to hear his thoughts. Second, I also have with us Julie Witt, and Julie is an inspiring leader in the global trade compliance community. She expertly navigates the complex trade environment, whether it's business, regulatory, or operational, and she does this in the semiconductor industry. I know Julie from serving with her on the regulations and Procedures Technical Advisory Committee, which is an advisory committee to the BIS. And we serve together and provide advice to the government on an ongoing basis. And finally, I'm going to be joined by Robert Kearsley. Robert has over 25 years experience in US and multilateral export controls and sanctions. And this includes a very diverse background in government. in law, in consulting, in an industry. And Robert also is on the Rap Tech. I serve together with Robert. And one of the things I enjoy every time we do have a meeting in DC with the government, the night before the meeting, a lot of us will get together for dinner. And I enjoy getting to know both Julie and Robert and others a lot better through those dinners. So with that in mind, I'd like to go ahead and Welcome our three guests. Welcome to Rittner Reflections Jeff (04:19) Okay, I am so excited to have you, Robert Kearsley, with us today and Jose, you as well. Really looking forward to having this conversation. As I mentioned, both of you are on the ground in Washington, D.C. at the BIS Update Conference. And I'm sure now that almost the first day is complete, I'm sure you've had a lot of information come your way and you probably have been able to think through what was said. I thought maybe to start with first of all, Jose, I start with you. I understand this is your first update and I'm just kind of curious. What do you think? How is it? Jose Vega (04:58) Yeah, this is my first time attending the BS update and I'm enjoying it and then trying to take it in as best as I can. Again, new experience. First time actually in DC, so enjoying the town as well. As far as the conference, I've been to other regional BIS conferences and it's very similar to that where you see, as you know, the tech industry trade specifically is a small world. So you see a lot of former colleagues or folks in the industry that you talked in the past. So that's been fun to see. But yeah, I'm enjoying it. I feel like it was an interesting start. And I did check with some of the folks that have attended in the past and they're saying, yes, these kind of things haven't happened in the past, but we can go into more details after you get Robert's input. Jeff (05:47) Right, right, okay, great, well that's good. Robert, I think you've attended these many times, so what do you think? How does it compare? this like a typical BIS update conference or is this all different? Everything's new. Robert Kearsley (06:00) You know, I think, yeah, I think this don't quote me on this, but I think it's probably my 20th update. So yeah, so I don't know if I get a special award for that, but certainly no one's told me. Yeah, it just has a different feel to it than other updates because of the kind of. Jose Vega (06:10) Ow. Jeff (06:16) Mm-hmm. Robert Kearsley (06:19) rapid changes that we're seeing, and not only reference on exports, but imports as well, right? And especially the rapid movement of this administration to make changes. We're just starting to feel that, I think, on the regulatory side. And of course, being that it's also been a change over administration, there's kind of a pause in the regulators kind of moving forward. It's almost like you can tell they're kind of waiting to see what direction they need to take and where this is headed. yeah, so a little different feel, but sort of the same in terms of just kind of the same programs and things. Jose Vega (07:01) to what Robert was mentioning, I feel like that's why there may be a different tone to this one because there were, one, we started a bit later than I thought we would, I think it was 20 minutes later than the agenda, but we ended up after the first session more than an hour earlier than normal, normal than scheduled. And I feel it's because what Robert mentioned as far as Julie Whity (07:22) Mm-hmm. Jose Vega (07:28) the transition in the government, feel like there may be some of these speakers or keynote speakers that we would have seen or that were in the agenda. The government doesn't have anybody in those positions. We were also supposed to get a keynote speaker for lunch and we didn't get one. So I feel like those are two areas where maybe those positions just haven't been filled. So I find that interesting. Jeff (07:34) Mm-hmm. Mm-hmm. Mm-hmm. Julie Whity (07:39) yeah. Jeff (07:43) okay. Right, Yeah, no, that is interesting for sure. And Julie, I know you've been to these updates a number of times. So what has been your impression thus far? Julie Whity (08:03) I share the same sentiments as Jose and Robert. mean, this morning I would have thought that Kessler would have spoken and he basically did an introduction. that really opened up our agenda where we were really early for everything. So it gave us some networking time, but you would have thought that since he was recently confirmed that he would have probably... tried to set some sort of tone or convey some type of message. I don't think he took that opportunity prior to just doing the introduction to Letnik coming. But I think that they're doing their best right now to put out existing information and not convey too much to industry. And just basically just to their time until they get certain people in certain positions. Jeff (09:02) Right. Just for the listeners on the podcast here, Kessler is the Assistant Secretary of BIS Bureau of Industry and Security. he was a keynote speaker, I think is what you're saying, Julie. And he preceded Lutnick. Is that Howard Lutnick? And Howard Lutnick is the Secretary of Commerce appointed to be Secretary of Commerce. anything you learned from Lutnick, did Lutnick deliver any interesting news or was it? Jose Vega (09:15) Yes. Robert, would you like me to go first or would you want to provide your input? Yeah, for me, I think the message that Lang Nian was trying to convey was to the folks in attendance was that he sees the industry as, or he hopes that the industry becomes the eyes and ears for BIS when it comes to China and compliance in general. And he made the point that China's interests are not aligned with our industry, right? And so the idea was that we need to be partners with BIS. I feel like that was the main message with regards to the next comments. But there were some interesting tidbits, specifically on the comma here was that they will try, meaning the administration will try to bring export controls as part as future trade deals. that's a new approach that I haven't seen in the past. Jeff (10:06) Mm-hmm. Mm-hmm. Jose Vega (10:27) that caught my ear and for me, I'm curious how they plan on doing that, right? Because as you know, we have the Wassenaer agreement, so what does that mean, right? Does that mean the US goes on its own? again, at this point, Lutnik is trying to keep everything high level because it may be that they may not have something in detail as far as a plan, but overall they have their priorities. Yeah, and it seems like China continues to be the priority. Jeff (10:36) Yeah. Right. I see, right. Yes. Robert Kearsley (10:56) Yeah, and just to, if I may add onto that, Jeff, yeah, what Jose said is very accurate. One of the themes that came out of this, and it does kind of fit in line again with the administration and priorities, it talked about the threat to intellectual freedom. I thought was a kind of underlying theme to all this. And again, it used China as an example of the kinds of things they're doing in terms of acquiring technology and things, and also, Jeff (10:58) Yeah, yes. Robert Kearsley (11:24) You know, even owning facilities where they could compromise the US because of the ownership, Panama Canal is brought up of all things by the secretary. There was some priorities mentioned. AI was brought up as being a concern. Quantum computing. Jose Vega (11:33) Mm-hmm. Yes. Robert Kearsley (11:43) was another area that was brought up by the secretary as being a focus. One of the highlights I'll take away, and I'm sorry if I'm jumping ahead, Jeff, I don't wanna do that, but he did talk about, and he used the word dramatic increase in enforcement and fines or penalties. So he definitely brought up the notion that they're gonna go after the bad ones. And again, in this austerity, Jeff (11:43) Okay. No, it's OK. No. Jose Vega (12:02) Yes. Yes. Jeff (12:02) but Mm-hmm. Robert Kearsley (12:13) time how that's going to happen with enforcement and extra resource to do that. Who knows? But he did make that clear that they want to increase enforcement. That was a big. Jeff (12:24) Wow, yeah. Robert Kearsley (12:28) He did talk about more on kind of this bringing industry back to the United States. So the notion of bringing back semiconductors, know, chips to the U.S. domestic steel and aluminum was a big focus. He said there's greater focus on supply chains. Jeff (12:35) Mm-hmm. Mm-hmm. Mm-hmm. Right. Robert Kearsley (12:45) Also telecommunication parts being kind of a concern, building drones in the US versus, know, outsourcing that, building data centers and protecting them. So he had a litany of things that he was trying to emphasize about bringing certain industries back to the United States for various reasons, including national security. Jeff (12:59) Yeah. would that Jose Vega (13:08) And in addition to Jeff (13:10) was there probably because the others below him are so new to your point, Robert, and yours, Julie, that so new that Lutnick has been in the position probably the longest. in fact, I don't recall a BIS update where the Secretary of Commerce came and spoke for quite a while. But Robert, what do you think? you, if you recall a secretary speaking before at a BIS update? Robert Kearsley (13:36) We've, I recall we were supposed to have a secretary one time and they canceled. So yes, this is not a normal thing. And also usually if they were to speak, it'd be some kind of cursory thing, right? And then it would be handed off to the undersecretary. But to your point, these folks haven't been in place long enough. And so the secretary, think, Jeff (13:42) Okay. Yeah, right. Yeah. Yeah. Yeah, right. Robert Kearsley (13:59) certainly gave the administration position and those priorities, which normally we may not have had set forth like that in such detail. Jeff (14:06) Right, right, exactly. Jose Vega (14:08) And adding to Robert's comment, beyond bringing industry back to US, did find it also interesting that Lutnick did mention that we cannot lose Taiwan or we'll lose the chips that are coming from that country. So it sounds like they're not closing the door on the companies that are outside but are willing to invest in the US as well because of that supply chain need. Robert Kearsley (14:33) And I think along those lines that Jose said, yeah, he also mentioned, right, that they need good partnerships with foreign partners that are aligned with the US. So it's recognizing that, we can't bring every industry back, but we do have to align ourselves and ensure that they have the same kind of controls and so on that we do. Jeff (14:50) Right. So now during the morning and lunch and early afternoon, it sounds like you didn't have a luncheon speaker, but during the rest of the morning, early afternoon, did you have, were there other speakers or what else was covered that was Jose Vega (15:01) Please Jeff (15:02) interest? Jose Vega (15:03) For me, just saw we ended up after lunch, we ended up going to the different breakout sessions. So that's where we, at I've been since the morning. So we've only had one speaker today. Yes, yes. Jeff (15:08) Okay. Okay, got it. Wow. Interesting. So which breakout did you go to, Jose? Jose Vega (15:22) I attended the end user control once, and then I just came out of know your customer breakout session. So as you know, didn't tell you, end user controls are something that we're constantly working with and working through. So the only thing I found interesting was the subsidiary questions that were coming out in the Q &A. Jeff (15:40) Yes. Jose Vega (15:48) They're trying to use different scenarios. so, I found some of that interesting because when it comes to the entities list, they're expanding those controls, right? And they're expanding the entity. And there were some questions around, as you know, they recently introduced the restricted addresses in the entity list where they don't have a name, but they have an address. And so, any entity... on that address regardless of the name is restricted. So they've had different questions in that area, variations of that scenario, which I found interesting. So that's what I got out of the end-use and end-user controls breakout. The other one I attended was the, like I said, the annoying customer. And they just kind of went through all the different, know, red flags, programs and tools and resources that they have. Jeff (16:18) I think. Jose Vega (16:43) So they go over also that there's a new BIS website. So they showed that through us. So if you go to bis.gov, it's a new website and it is easier to navigate it. So as far as FAQs and things like that. So I recommend you take a look at it when you get a chance. Robert Kearsley (16:59) Yeah, Jeff, I'll go ahead and speak what I saw this afternoon or this morning and this afternoon. I had attended the Emerging Technology and Foreign Technology Analysis Workshop that was with Tara Gonzalez. She's director of Emerging Technology Division and Kate Corrin, the director of Foreign Tech Analytics Division. Most of the presentation or a big part of it with Tara covered was this 1758 provisions of the NDAA about emerging and foundational technologies. She talked about how there's been, of course, we know there's been some ECCNs that have been introduced around that. We know, of course, additive manufacturing was added. We know that quantum computing is also one of the ones they covered. And what she mentioned, I thought one of my takeaways was that for 2025, the focus is going to be or is on advanced manufacturing, biotech, quantum and space technology. And those are all matter of fact, subjects that are being covered. That update, but she said her group is that's a big focus. The other thing was, or what else she'd covered was talking about the emerging tech steering committee and its role and what they do in terms of bringing together defense energy and state and also the intelligence community to talk about emerging and foundational technologies. And then Kate Corrin covered foreign availability and some of the things they do in terms of some of the criteria for determining, determined foreign ability. And then there was a series of questions asked. One of the things that came up was whether or not the technical advisory committees, which are an integral part of this process, whether or not There would be any impact with certain resources and constraints within the various agencies. And we were told emphatically no, the technical advisory committees are statutorily created. So have somewhat protections other than other agencies that have committees that are volunteer. So that's saying that the tax are alive and well, and we'll continue to support the different areas. This afternoon, I intended the biological controls session. And that was with David Johnson, who's the director of treaty compliance and Theodore Kerfin. And he's the director of Chem and Biocontrols Division. And Tara Gonzalez, the director of Emerging Technology Division. She also was on this one. A lot of the time we spent talking about treaty compliance Jeff (19:29) Director of Treaty And he's the director of Chem and And Tara Gonzalez is the director of Emerging Technology Division. a lot of time we spent talking about treaty Robert Kearsley (19:43) that process. I don't really have any takeaways from there. it seems like they did go through the various rules, the Australia group rule that was introduced in December 23 of 2024 and some changes to some specific ECCNs around 1C350 and 2B351 and some others. Then there was another rule. or a couple other rules that were introduced, but there weren't too many takeaways that the feeling I got again is they are in kind of a holding pattern to introduce anything new, but they're working within the regulations that have already been imposed. So they didn't mention anything on the future, but say I sense that being kind of a holding pattern right now for anything new. Jeff (20:18) holding pattern new, within the regulations that have already been imposed. Well, we are running on time because I know each one of you need to get back to the next breakout session. So I'd like to thank you for the discussion today. It's a good start. It's really helpful to understand kind of the tone of what's happening and some of the key messages. I appreciate each of you providing that and we will meet again tomorrow and I'm really looking forward to hearing some of the details about some of the sessions that you attend and it'll help all of us just get a sense of what BIS is up to and how do we go forward from here. So thank you once again for your time today and we'll talk tomorrow. Keith Belmar II (21:04) You have been listening to Writner Reflections. Stay tuned for more content from BIS live here in Washington, D.C.