New BIS Enforcement Policies Haven’t ‘Chilled’ Voluntary Disclosures, Official Says
The Bureau of Industry and Security's new administrative enforcement policies, including higher penalties for more serious violations, hasn’t led to a significant rise or fall in voluntary self-disclosures so far, said Matthew Axelrod, the agency’s top export enforcement official. Axelrod, speaking during a Nov. 14 event hosted by the Society for International Affairs, said BIS received 150 new VSDs since the policy change in June (see 2206300069), which he said was about the same number it received during the same time period each of the last two years.
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
“For those wondering if our new process has ‘chilled’ the submission of VSDs – it hasn’t,” he said. “Companies continue to recognize that it is always better to knock on our door before we knock on yours.” A former BIS agent speculated that BIS’s new policies -- including the decision to publicize charging letters -- could lead companies to more frequently choose to voluntarily disclose a potential violation, which usually leads to only a warning letter (see 2205230018).
Axelrod also said the agency has made progress under its new academic outreach initiative, which is aimed at prioritizing outreach at universities that have an “elevated risk profile” and bolstering export control training at those schools (see 2206290019). BIS has so far identified 20 universities with an “elevated risk profile,” and each school has agreed to work with a BIS special agent on compliance issues.
The agency has already conducted an export control webinar for the universities and plans in December to provide training on conducting open-source research to better vet “potential partners.” Next year, BIS will offer them “broader training on regulatory requirements, including fundamental research in academic settings,” Axelrod said. “In short, we’re committed to doing all that we can to both protect national security and maintain U.S. leadership in academic research and innovation.”
Axelrod also said BIS is evaluating new ways to measure and track its investigative and analytic efforts “so that we can evaluate how tight the fit is between our highest priorities and what we’re spending most of our time on.” He said this new effort is aimed at making sure BIS is using its “finite enforcement resources” effectively.
“For many years, the default was simply to count the numbers of arrests made, convictions obtained, and jail terms imposed. Arrests, convictions, and sentences are fairly easily tracked,” Axelrod said. “But just as the broader law enforcement community has begun to search for different metrics in an attempt to better and more accurately measure the impact of their actions, so too are we at Export Enforcement.”
Although BIS is “still settling on the best way to measure our impact,” the agency has begun evaluating its enforcement leads and cases against three criteria: “the criticality of the technology, (2) the end users of most concern, and (3) the end uses of most concern.”
BIS evaluates how critical a technology is by assessing whether it could “eventually lead to military overmatch by a foreign adversary,” Axelrod said. For end-users of most concern, BIS is focused on military, intelligence and security agencies in China, Russia and Iran, and countries that pose similar threats to the U.S. For its third criterion, Axelrod said it looks at “misuses of dual-use technology for applications such as nuclear weapons, missiles, chemical and biological weapons, advanced conventional weapons, and human rights abuses.”
“While we’re still refining the best way to measure our impact, we have started to use these three criteria and to inventory our existing caseload against them,” he said. “So far, these new criteria and metrics have proved helpful, both in confirming that our caseload is broadly in line with our priorities and in identifying areas for further analysis.”