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March 22, 2019
Export Controls: New Challenges
Overview
based on U.S. policy. Foreign policy controls may be
Congress has authorized the President to control the export
unilateral or multilateral in nature. The EAR unilaterally
of various items for national security, foreign policy, and
control items for antiterrorism, regional stability, sanctions,
economic reasons. Separate programs and statutes for
or crime control purposes.
controlling different types of exports exist for nuclear
materials and technology, defense articles and services, and
The EAR also comprises lists of sanctioned, denied or
dual-use items and technology—items that have both
unverified parties, subject to a license policy of denial. It
civilian and military uses. Under each program, licenses of
also sets out licensing procedures and civil and criminal
various types are required before export. The Departments
penalties for violations. While nearly all exports are subject
of Commerce, State, and Energy administer these programs.
to the EAR, the Commerce Control List (CCL) establishes
At the same time, Congress also legislates country-specific
controls on specific items either on a multilateral or
sanctions that restrict aid, trade, and other transactions to
unilateral basis. Sanctioned countries or entities are subject
address U.S. policy concerns about weapons proliferation,
to a policy of denial for all products, whether on the CCL or
regional stability, and human rights.
not. Table 1 lists the types of items on the CCL.
Export Control Act of 2018 (ECA)
Table 1. Commerce Control List Categories
Export controls have become part of the debate over U.S.
0 – Nuclear Materials, Facilities & Equipment (and Misc. items).
technological leadership and attempts by other nations to
obtain critical U.S technology legally or illegally. Congress
1 – Materials, Chemicals, Microorganisms, Toxins.
passed the Export Control Act of 2018 (ECA) (Subtitle B,
2 – Materials Processing.
Part 1, P.L. 115-232) as part of a wider effort to revise U.S.
3 – Electronic Design, Development, and Production.
investment policy through passage of the Foreign
4 – Computers.
Investment Risk Review Modernization Act (FIRRMA)
(Title XVII of the same act).
5.1 – Telecommunications.
5.2 – Information Security.
The ECA replaces most of the expired Export
6 – Sensors and Lasers.
Administration Act of 1979 and provides a permanent
7 – Navigation and Avionics.
statutory basis for controlling the export of dual-use goods
and certain military parts and components. The ECA
8 – Marine.
requires the President to control “the export, reexport, and
9 – Aerospace and Propulsion.
in-country transfer of items subject to the jurisdiction of the
Source: Export Administration Regulations, Part 774.
United States, whether by United States persons or by
foreign persons.” The ECA also requires the Secretary of
Issues for Congress
Commerce to “establish and maintain a list” of controlled
With the passage of the ECA, some Members of Congress
items, foreign persons, and end-uses determined to be a
have expressed interest in other aspects of export controls,
threat to U.S. national security and foreign policy. The
including controls over emerging, surveillance and
legislation also called on Commerce to require export
repression technologies, deemed exports, and Hong Kong.
licenses; “prohibit unauthorized exports, reexports, and in-
country transfers of controlled items”; and “monitor
Emerging and Foundational Technology
shipments and other means of transfer.”
Perhaps the most significant change in the ECA requires the
President to establish an interagency process—led by
The ECA largely maintains the current system as codified
Commerce, including Defense, State, Energy, and other
under the Export Administration Regulations (EAR) (15
agencies—to identify emerging and foundational
C.F.R. 730 et seq.), which had been maintained under the
technologies. Commerce then is to establish a licensing
International Emergency Economic Powers Act (P.L. 95-
policy for those items. The ECA stipulated that at a
223) for nearly a quarter-century. Under Commerce, the
minimum, exports to countries subject to an embargo, or
Bureau of Industry and Security (BIS) continues to
arms embargo, including China, would require a license for
administer the dual-use export control system and the EAR,
export of such technology.
which contains the licensing policy for dual-use items and
certain military parts and components. The regulations
Currently, BIS is determining this policy through the rule-
control items for reasons of national security, foreign
making process. BIS announced a Notice of Proposed
policy, or short supply. National security controls are based
Rulemaking for controls on emerging technology in
on a common multilateral control list, known as the
October 2018 and received comments in January 2019. BIS
Wassenaar Arrangement (WA); however, the manner in
sought industry input on defining emerging technology;
which those controls are applied, and to which countries, is
criteria for determining whether specific technologies
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(Table 2) are essential to U.S. national security; other
production was the largest category of items for which
technology categories that could warrant review to identify
deemed export licenses were obtained. BIS conducts
emerging technologies; status of development of those
outreach efforts to universities and research laboratories to
technologies in the United States and worldwide, including
make them aware of the license requirements.
the foreign availability of the technology—often a key
impediment to effective controls; the impact of specific
Surveillance and Repression Controls
controls on U.S. technological leadership; and other
Observers have expressed concern for several years about
potential approaches to identifying emerging technologies
export controls on items that assist repressive regimes to
warranting consideration for export controls. After
surveil and control their populations. The Wassenaar
evaluating these comments, BIS is to decide on the next
Arrangement included network cyber-surveillance and
steps for the proposed regulation.
intrusion software on its control list in 2013, but industry
and civil society have resisted such proposals, and the
Table 2. Emerging and Foundational Technologies
United States has not yet adopted the controls. Yet these
Additive Manufacturing
technologies are on the emerging and foundational list (see
Advanced Computing Technology
Table 2) and may yet be subject to export controls.
Advanced Materials
Recently, Congress has paid particular attention to the
Advanced surveillance technology
export of surveillance equipment, including facial and voice
Artificial Intelligence (AI) and machine learning
recognition, as well as DNA sequencing technology of
Biotechnology
potential use by repressive regimes. In the 116th Congress,
Brain-computer interfaces
Members of Congress introduced legislation (S. 178, H.R.
Data analytics technology
649) to support the Uyghur minority in China’s Xingiang
Hypersonics
province, which included a recommendation to the
Logistics technologies
Commerce Secretary to review and consider the prohibition
Microprocessor technology
of exports of U.S. goods and services to state security
Position, navigation and timing (PNT) technology
entities in China and to place those organizations on the
Quantum information and sensing technology
BIS “entity list” of denied parties.
Robotics
Source: Bureau of Industry and Security.
Hong Kong
The export control status of Hong Kong (HK) has also
This emphasis on foundational and emerging technologies
come under scrutiny. Hong Kong continued to maintain a
serves to determine whether new export controls on these
separate customs territory from the mainland following its
technologies are feasible and also identifies technologies
return to China in 1997. Under the HK Policy Act, the
that should be included in regulations of foreign
United States recognizes HK as a separate customs territory
investment. Under FIRRMA, the critical technologies
and maintains special export controls agreements with the
selected by this process would receive additional screening
HK government. Under the act, this distinct export control
by the Committee on Foreign Investment in the United
status is predicated on HK maintaining a “high degree of
States (CFIUS). This process responds to the concern that
autonomy” under the “one country, two systems” policy
potential adversaries could obtain nascent technology
enshrined in its Basic Law. While the U.S. customs and
through investment in U.S. firms.
export control officials engage in close cooperation on
strategic trade, some observers have expressed concern,
Deemed Exports
given the perceived erosion of HK autonomy in other areas,
Congress is also giving attention to the role of “deemed
regarding HK’s continued ability to prevent diversion of
exports.” When an item is exported, the technology and
sensitive goods to China. In its 2018 annual report, the
software associated with that item are also exported. An
U.S.-China Security and Economic Review Commission
item is “deemed” to be exported when a foreign national
recommended that Congress seek a report from Commerce
receives information about controlled technology in the
on the feasibility of maintaining HK’s differential policy.
United States, whether through academic research or work
in a company laboratory. Under the EAR, deemed exports
are treated in the same manner as other exports. If an item
Further Suggested Reading
requires a license for export to a certain destination, an
CRS Report R41916, The U.S. Export Control System and
academic institution or firm engaging a person from that
the Export Control Reform Initiative, by Ian F. Fergusson
destination would also need a license to allow that person to
and Paul K. Kerr
work with that technology in the United States. Not all
technology is subject to the deemed export requirements;
CRS In Focus IF10952, CFIUS Reform: Foreign
there is a broad exception for “fundamental” research.
Investment National Security Reviews, by James K. Jackson
and Cathleen D. Cimino-Isaacs
The number of foreign students, especially Chinese
students, studying applied sciences and technology in the
United States has led to questions about how the deemed
Ian F. Fergusson, Specialist in International Trade and
export requirements are enforced. According to BIS
Finance
statistics for FY2017, BIS approved 1,406 deemed export
IF11154
licenses and rejected 24. China was the largest country of
origin for deemed licenses, at 55.5%, with Iran making up
19%. Overall, electronic design, development, and
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Export Controls: New Challenges
Disclaimer
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