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Romney Leads Senate Hearing on Strengthening Export Controls Enforcement

WASHINGTON—U.S. Senator Mitt Romney (R-UT), Ranking Member of the Senate Committee on Homeland Security & Governmental Affairs (HSGAC) Emerging Threats and Spending Oversight Subcommittee, today led a bipartisan hearing with Senator Maggie Hassan (D-NH), Subcommittee Chair, focused on strengthening the enforcement of export controls, which protect national security and prevent our adversaries from acquiring and misusing American-developed technology.

Senators Romney and Hassan have made strengthening the enforcement of export controls a top priority of the ETSO Subcommittee. Yesterday, they introduced the Export Controls Enforcement Improvement Act, bipartisan legislation to bolster the Export Enforcement Coordination Center—an interagency hub for information sharing and coordination among the key agencies responsible for export control enforcement. In January, Senators Romney and Hassan sent a letter to the Government Accountability Office (GAO) requesting an assessment of the Department of Commerce’s export controls restricting advanced semiconductors, semiconductor manufacturing equipment, and related technologies from going to China and other adversaries.

A transcript of Senator Romney’s opening statement—as entered into the Congressional Record—and excerpts of his questioning can be found below. 

Opening Statement:

Thank you, Chair Hassan, for holding this hearing with me on export controls. To our witnesses, I appreciate you joining us today. I look forward to today’s discussion about how we can improve export controls enforcement efforts.

The United States leads the world in technological innovation. Freedom and democracy are great elixirs for progress. While we strive to maintain that position, we must also remain cautious of our adversaries, especially China and Russia, as they work to steal our advanced technologies for their own gain.

Both the Trump and Biden administrations have emphasized the importance of export controls in constraining Russia’s military and in competing against China. They have both expanded and improved U.S. controls on sensitive technologies. However, export controls are only as effective as the private sector’s compliance and government enforcement of those controls.

Despite having export controls in place, sensitive technologies are still falling into the hands of our adversaries. Public reporting has highlighted that transshipment and diversion remain major challenges. For example, U.S. and EU exports reportedly increased significantly to central Asian countries that in turn are increasing their exports to Russia. There are real concerns that Western technologies are making their way to our adversaries.

Effective export controls enforcement requires the cooperation and coordination of many government entities—several of which are represented here today—the private sector, and our allies and partners. While I recognize that such coordination is challenging, there is more that both Congress and your respective agencies can do to coordinate, deconflict, and strengthen the enforcement of export controls.

That is why Senator Hassan and I introduced legislation to improve export controls enforcement by establishing the Export Enforcement Coordination Center in law. This Center should be the heartbeat for export controls coordination. Our legislation would help ensure that agencies are talking to each other and working with the private sector and foreign partners to keep sensitive technologies from going to U.S. adversaries.

As we work to improve export controls enforcement, we must also assess whether our export controls on the most advanced technologies—such as semiconductors—are working with respect to China. In January, Senator Hassan and I sent a letter to the Government Accountability Office to request that they evaluate the effectiveness of recent export controls on our most sensitive semiconductor technologies.

How are China, Russia, and our other adversaries exploiting loopholes in our export controls? How can we combat transshipment of sensitive technologies through improved partnerships with the private sector and U.S. allies and partners? I look forward to hearing the witnesses’ thoughts on these issues.

Thank you, Madam Chair.

Questioning:

Senator Romney: There’s a great deal being written about the degree of leakage, if you will, of things that are not supposed to be exported from our country or from our friends that are somehow getting in the hands of adversaries of one kind or another. How great a problem do you think that is? I mean is this a tiny share of those things that are most sensitive or is this a pretty significant problem that that we need to address? … I’m thinking particularly about large scale chips that go into AI or other key defense technologies. How much of that is getting through? … Are we you know, not really a sieve, but drip, drip, drip?

Mr. James Mancuso: I think the sheer volume of legitimate trade far outweighs the illicit trade that’s going on. However, that small slice is of concern. So, what you have is you have folks at this table, all the 20 partners at the E2C2, the intelligence community, all of us are completely laser focused on retaining America’s innovation, our creativity, our intellectual property right. We develop the most advanced weapons systems in the world because of our ability to create this. We are the envy of the entire world. That also means our adversaries will stop at nothing to obtain this technology in these weapon systems…We are an investigative agency looking at these agencies attempting to disrupt and dismantle the flow of this technology…I’m also concerned the day that they don’t want our technology, that day that we aren’t the world leader, because that means that they’ve surpassed us and they’ve become superior. And all of us at this table are laser focused on making sure that day never happens.

Romney: I think there’s a recognition that with regards to AI in particular, it’s very difficult to control the software. Some software on AI has already been put on Open Source and represents, in my view, a huge breach…of good judgment…And there are some who believe that the only way we’re going to try and keep AI from being used in a most negative way is if we limit the supply of the chips necessary to operate AI. Are we able to do that successfully or is it like, no, we really can’t?

Mr. Kevin Kurland: So, yes, Senator, you know, we have been imposing controls not only on entities that are involved in these types of diversionary attempts, but, you know, we have over the past year and a half, rolled out a series of significant countrywide controls on China in addition to parties and not only that are resident there, but there are actors that are sitting in third countries as well. It is a complex problem set and certainly with regards to the semiconductor ecosystem where the vast majority of chips that are produced offshore trying to, you know, identify potential violators is something that we all here are working hard to do, using all source intelligence or putting together analytical cells that are trying to identify those activities, working hand-in-hand with industry to both prevent on the front side. And then if there are violations, to have penalties that are high enough to deter others is critical…Just this morning, you know, we added four companies to our entity list in China that were explicitly diverting AI chips to the Chinese military weapons program so that we can alert industry and have them harden their supply chains when they’re doing their due diligence of transactions.


Romney: Ms. Choi, who’s been the most successful in being able to get the key technologies that are vital, and we have endeavored to restrict? Is it China or is it Russia? We read stories about Russia being able to get technologies that they’re using in Ukraine. The same time we read about China just today, we’ve read more stories about China taking getting advantage of our technologies. Are they equally effective or is one more effective than the other?

Ms. Eun Young Choi: I would say both of those countries pose concerns. But with regard to China, that threat assessment notes that China seeks to become a world science and technology superpower and to use this technological superiority for economic, political, and military gain. And among its various methods to do that, it includes means to acquire or steal IP, its cyber operations, and its illicit procurement. So, I would say China is laser-focused on trying to advance its science technology program, and it’s a focus for us at the Department of Justice.

Romney: I’m going to ask an open-ended question, which is what you would recommend that we do, if anything, to reduce the flow of technology from the U.S., particularly that which has been limited by export controls that nonetheless is finding its hands in Russia, China and other places, in part because it’s so critical now with AI?

Choi: We simply are at our wit’s end when it comes to resourcing and doing the big data analytics. And we know our adversaries are dealing with our data. We need to be able to do that and be armed to do that. And so I would have that in mind when you’re thinking about resourcing in the FY25. One other thing that’s maybe not so obvious but is very important to us is the reauthorization of Section 702. It’s absolutely vital to all of the national security work that we do. But in particular, I think it’s important to highlight that in certain instances we’ve been able to glean insights into illicit transfer of technology and goods to hostile foreign state actors through the use of that particular tool.

Kurland: I’m on the enforcement side but what I can commit to you is that if new actions are taken, we will commit to aggressively enforce those. From our perspective, you know, that requires you know, more analysts, more attachés overseas, more agents that are working with DOJ to bring criminal cases. And it gets back to that IT issue as well: better IT systems so that we can create efficiencies to identify these violators and then more quickly be able to bring those cases, whether it’s a criminal case, whether it’s an administrative case, whether it’s an entity listing…But the more resources that we have, the more effective we can be.

Mancuso: The important first step was today we’re having a hearing highlighting the importance of this. Number two, HSI is not a policy agency. We’re not a regulatory agency. We’re an investigative agency. So, as I mentioned earlier, just ensuring that we have the resources to do what we do. And we are like I said, we have a very healthy global footprint and we’re working every day. The men and women of HSI are working with our international partners.