FY27 BIS Budget: the AI Arms Race and the ICTS Office
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House Foreign Affairs U.S. House of Representatives
Follow its sittingsBrian Mast
Those are the stakes. They are looking to be able to more quickly assess every capability in the Pacific against the United States of America's military.
The House Foreign Affairs Committee has done its part. We've marked up more than 20 export control bills to execute on the commander's guidance. And to be clear, these bills we're pushing on this committee are being proposed because they need to be there to get the job done. That's why we are proposing these bills. We support the president's request to increase BIS's budget because that's what is needed to get the job done in this high-stakes race.
There have been significant enforcement successes. Stopping approvals of licenses for blacklisted companies is an important achievement and we congratulate you on the work that you've done there. But key orders from the president need to be fulfilled 100%. BIS has not added entities to the list in 2025 since October of 25. We need to see more of those entities added to the list.
BIS, it is important that BIS makes licensing decision including denials in a timely manner and provides clarity to American businesses. That is something that we want to support you on. BIS and the House Foreign Affairs Committee working together have to carry out the president's vision. We have to win this new cold war against the commies in Beijing that are trying to steal everything that they can and you are the shield from preventing them from stealing everything that they can. I thank you for coming today Under Secretary and I look forward to hearing your testimony.
I would ask now unanimous consent that the member from Michigan, chairman of the committee on CCP, Chairman Moolenaar, be advanced to sit on the dais and participate in today's hearing without objection. Chair now recognizes, actually I will say this first because Ranking Member Meeks is not here right now, other members of the committee are reminded that opening statements may be submitted for the record. We are pleased to have you Under Secretary for Industry and Security Jeffrey Kessler before us today. Thank you for joining us again. Your full statements will be made a part of the record.
I'll ask you to keep your spoken remarks to five minutes in order to allow time for members' questions. And I'll also thank you for the times that you've joined us in the SCIF as well to give us classified briefing. You made yourself very accessible and we appreciate that. And I now recognize you for any opening statement that you may have.
Jeffrey Kessler
Thank you Mr. Chairman. And good morning to you all. Let me start by offering my condolences to you, to this body, on the passing of your colleague Senator Lindsey Graham, a statesman and a patriot whose service elevated and strengthened the country. Chairman Mast and distinguished members of the House Foreign Affairs Committee, thank you for inviting me to testify today on the fiscal year 2027 president's budget request for the Department of Commerce's Bureau of Industry and Security. BIS's mission is to safeguard the crown jewels of the American economy, our critical technology and supply chains.
Under the leadership of President Trump and Secretary Lutnick, BIS is fulfilling this mission more strongly than ever. Consider the enforcement of our export laws. Before the Trump administration, the penalties for export violations were anemic. Licenses were being rubber-stamped even for sensitive technologies and entity-listed companies. Too many in the business community viewed export controls as a cost of doing business, not a reason to change behavior.
All of that has changed dramatically under this administration. From 2024 to 2025, the total monetary penalties imposed by BIS increased more than 18-fold, from $16 million in 2024 to $324 million in 2025. And in 2026, we've already doubled the amount of administrative penalties imposed compared to 2025. BIS's enforcement unit has closed out several landmark cases. Within the past year, BIS announced a $252 million settlement with Applied Materials on a case involving the illegal transshipment of semiconductor manufacturing equipment, a $95 million administrative penalty on Cadence Design Systems in a case involving the illegal export of semiconductor design software, and a settlement agreement totaling $36 million in penalties in a Bosch case involving the diversion of microelectronics and automotive software to a company on the entity list.
In addition to these civil resolutions, our agents, BIS agents, helped obtain indictments charging three individuals in a multi-billion dollar scheme to divert servers containing advanced semiconductors through Southeast Asia. The problem now is that our resources are spread too thin, and we need more resources. Our enforcement officials are overburdened; they have more cases and more leads than they can handle, and more than their counterparts at peer law enforcement agencies. BIS's enforcement unit should be orders of magnitude larger to safeguard critical technologies more effectively. And that's why the President's budget requests an increase for BIS's enforcement unit from $122 million in fiscal year 2026 to $301 million in fiscal year 2027, a 147% increase.
This would enable the enforcement unit to increase from 299 positions to 669 positions. It would also enable BIS to increase the number of enforcement officials stationed overseas from 25 to 65. This appropriation would be a historic step toward transforming the agency to handle the national security mission that we have more effectively. The President's budget also seeks smaller but important increases in appropriations for BIS's export administration unit, which handles licensing and supply chain investigations. This includes an $11.7 million increase and 38 positions to add specialized engineers and technical experts to support enforcement by performing the technical assessments and licensing determinations that form the basis for enforcement actions.
It also includes an additional $20 million to support BIS's Section 232 program to revitalize industries that are critical to national security. President Trump has revolutionized Section 232. In his first term, he used it to address the security threats posed by foreign steel and aluminum imports, and now in the second term, BIS is using Section 232 more aggressively than ever, resulting in a manufacturing renaissance that's rebuilding our domestic industrial base, hiring American workers, and strengthening our national security. BIS has launched more than a dozen investigations, and the President imposed tariffs on steel, aluminum, copper, pharmaceuticals, semiconductors, autos, trucks, and lumber, with other sectors under consideration. Though we've instituted tariffs to address the national security threats, the benefits to the American people are enormous, and the administration has leveraged the authority to spur hundreds of billions of dollars in new investment in these critical supply chains.
New factories are springing up across the country, including crude steelmaking capacity, aluminum plants, resourced auto factories, massive new investments in semiconductor and pharmaceutical production, and an additional $20 million investment in the group at BIS that administers Section 232 is well worth the investment. Let me now turn to the Office of Information and Communications Technology and Services, or OICTS.
This office is responsible for mitigating foreign adversary threats in the supply chain. OICTS is implementing, today implementing an industry-wide regulation, the first of its kind, to limit foreign adversary presence in supply chains. It's called the Connected Vehicles Rule. This rule prohibits foreign adversary software in US passenger vehicles starting in model year 2027, which is what's being built now. It also prohibits foreign adversary connected hardware in US passenger vehicles starting in model year 2030.
BIS's enforcement of this rule has already made America safer. Following discussions with BIS, several auto companies have decided to excise foreign adversary technology from their US product offerings. These companies understand that BIS will not tolerate a risk of sabotage or data exfiltration in the cars that everyday Americans drive, and they have changed their business plans accordingly. OICTS is currently heavily focused on implementing the Connected Vehicles Rule correctly, and in the future, we expect the administration of this rule to become more routinized, and as that happens, BIS OICTS will consider creating new regimes for other sectors that also have risks to their supply chains. Overall, we expect the volume of work at OICTS to remain steady from fiscal year 26 to 27, and that's why the President's budget doesn't request an increase for OICTS.
I look forward to continuing the great work, the great collaboration that BIS has done with this committee and working with you all to make sure that BIS has the tools and the staff and the resources that it needs to keep America safe and to sustain our national and economic security. Thank you, and I look forward to answering your questions.
Brian Mast
Thank you, Under Secretary Kessler. I will now recognize myself for questioning, and we will alternate between Republicans and Democrats for questioning throughout this hearing. I want to begin by this. You talked about the increase for the BIS budget. I think we could easily see the need to double it beyond the number that we're doubling it to right now because of the nature of the threat that is going on right here and the importance of this to the globe.
So we know for a fact China is getting its hands on our most advanced AI technologies. It's not hyperbole. China has smuggled in thousands of Blackwell chips. They've smuggled them, and they work to smuggle them every day. It is accessing perhaps hundreds of thousands of Blackwells through data centers in places like Singapore, Malaysia, Thailand.
They are working to do this on a daily basis in other countries. And they still, they have access to technology from the US and its allies to make its own chips, and they're trying to get that access through other allied countries on a daily basis. These are what China is working at every single day. That is the way in which they present the threat to your office. That is why President Trump issued the America First Trade Policy Memorandum and the AI Action Plan, where he told BIS, close loopholes, strengthen export controls on chipmaking equipment.
And it has been a year since that commander's guidance, and I would like an update on this from you on where we're at. So just number one, have you aligned allied controls to US controls, and tell us about your use of the Foreign Direct Product Rule in doing so, please.
Jeffrey Kessler
Absolutely. Thank you. You know, we at BIS, we have made significant progress on several of the areas that you mentioned. You know, when it comes to export controls, for example, on semiconductor manufacturing equipment, one of the most significant changes that we've made is to start applying the appropriate level of scrutiny to export licenses involving that technology and export licenses involving exports to entity-listed companies. You know, one of the things that surprised me when I was in my office is to learn that the prior administration had granted thousands of export licenses to entity-listed companies.
I'm sorry?
Can you get to 100% enforcement?
Jeffrey Kessler
Well, that's always the goal and I agree with you that that's the benchmark by which we should be judged. To get to 100% enforcement, we do need additional resources. We are too small of an agency. We know, and I testified to the same thing a year ago, we know that we're only capturing the tip of the iceberg. We have shut down smuggling schemes, we have imposed major penalties on those who smuggle and divert our advanced technology, but there's, unfortunately, there's a lot of illegal activity going on that we haven't stopped yet, and we need a massive increase in the enforcement resources to be able to do that.
Brian Mast
Extensive, and much of that illegal activity is through Chinese military end users, as you all know. You probably know these companies better than most members of Congress. You have to deal with them on a daily basis. We deal with a hundred other things. Secretary of War Hegseth has stated publicly Alibaba, Tencent, CXMT, YMTC, and more, they work directly for the Chinese military.
So what does that mean for BIS policy when he identifies them as working directly for the Chinese military? How do you qualify them as military end users so that we don't sell them that technology?
Jeffrey Kessler
Look, we have to be realistic whenever we are thinking about exports into China. I think we all recognize that the government has significant control, exercises significant control over companies in the private sector there. We don't have any illusions about that. So we have to be very careful when we allow exports to there or to other country group D countries.
Brian Mast
Do you see those companies that I just listed as Chinese military end users: Alibaba, Tencent, CXMT, YMTC?
Jeffrey Kessler
I see those companies as playing an important role in the strategy of China to develop its indigenous AI.
Brian Mast
Are they Chinese military? We know that China has a fusion civil-military use constantly. Any place that they can fuse civil and military, they do.
Jeffrey Kessler
I believe these companies are on the 1268H list. YMTC is on the entity list. So, you know, obviously these companies have close ties.
Speaker 11
Alibaba and Tencent also on the 1268H list, right? So these are Chinese military end users.
Brian Mast
Do you assess them to be Chinese military end users like the Secretary of War does?
I completely agree with the Secretary of War.
Jeffrey Kessler
I will go and look at his statement and see exactly what he said. You know, look, these companies obviously they coordinate very closely.
Speaker 10
He said that Alibaba, Tencent, CXMT, and YMTC work directly for the Chinese military.
Then I'm sure that that is correct.
Speaker 9
My time has expired. Ranking Member Meeks, I believe you wanted to give a statement and ask your question.
Gregory Meeks
Yes. And first I just want to welcome to the committee Representative Debbie Wasserman Schultz, Representative Bell, and Representative Duncan, Pocan, excuse me, Pocan to the committee, and glad to have you here.
Let me thank you, Chairman, for hosting this critical hearing. Under Secretary Kastler, I want to welcome you and thank you for appearing today. And also thank you, actually, you're one of the individuals from the administration that have come to my office several times to talk and to try to work things out. And I want you to know that I do really appreciate that. And hopefully that we'll continue.
Of course, I've got a lot of questions for you. And since the last time you testified in front of this committee, which was nearly a year ago, I think much has changed. And you're here to, I guess, to justify the President's budget request for BIS. That requires us to examine BIS's record over the past 18 months and answer the many questions before this committee and provide the American people with a clear accounting of what BIS has accomplished and where it has fallen short. I've been deeply concerned by the Trump administration's mismanagement of export controls.
Rather than treating export controls as one of our most important national security tools, the President has turned them into a bargaining chip in broader negotiations with China. And as a result, the administration has issued virtually no significant new export control rules with respect to China and Russia, despite being in office for a year and a half. Instead, it has weakened existing safeguards, including by approving licenses for advanced AI chips destined for China. Moreover, the administration hasn't added a single entity to the entity list since last October. And according to CSIS, this marks the longest period of entity list inactivity since 2008, when export controls was nowhere near the center of our national security strategy.
The Biden administration added nearly 1,600 entities to the entity list. President Trump and Secretary Lutnick have added only 140 in a year and a half. Are we supposed to believe that Russia and Chinese companies are no longer trying to acquire sensitive technology for military and other malign purposes? In your testimony, you mentioned the need to codify the Office of Information and Communications Technology and Services, also known as OICTS. Yet many of the China actions and rules that office was developing have been shelved or rejected.
As a result, the office has not unveiled a single new rule during the second Trump administration. The policy paralysis and negligence at BIS got so bad that Chairman Mast was compelled to organize a 24-bill export controls markup in April. That raises an obvious question: why should Congress drastically increase the budget for an agency that has failed to fully use the authorities it already has? I hope you will be able to answer that question today. But it's not just the policy that concerns me.
Under Secretary Lutnick's watch, BIS has become less effective and less transparent. Which have been unacceptable delays in license reviews, which are harming our economy and technology leadership. Engagement with industry is at an all-time low, making compliance and cooperation difficult. Just last month, BIS had to issue guidance reminding companies that it will still, that it was still enforcing its own rules because many companies were no longer sure. Major policy actions are increasingly being implemented through private letters to individual companies rather than transparent rules that apply equally to everyone.
Legitimate questions about consistency, accountability, and whether export controls are being applied fairly. And we have seen years of expertise and know-how pushed out or leave voluntarily because of mismanagement and declining morale within the agency.
The bottom line is simple. BIS is not meeting its missions as I can see it. Under Secretary Lutnick's leadership, BIS has dropped the ball on rulemaking and entity list designations while focusing entirely on enforcement. And enforcement is indispensable, let's be clear about that. But it is far less effective when the underlying rules are outdated and ineffective.
The President's budget request largely doubles down on that imbalance by emphasizing enforcement while doing little to address the underlying policy deficiencies. And so I've long been an advocate for more funding and resources for BIS, but before Congress provides a significant funding increase, this administration must demonstrate that BIS is effectively using the authorities and resources it already has. So I look forward to our discussion today and questions. So, my first question to you is how many licenses has BIS approved for the H200 and equivalent chips sales to China?
Jeffrey Kessler
Thank you, Ranking Member Meeks. That information is confidential, but we have provided disclosures to the committee that list the license applications for the H200 and its equivalents that we've received and the status of each. So I'd just refer you to our confidential submissions.
Speaker 4
Okay. So you have provided, your staff has provided it, but it's confidential or classified? Is that what you're saying?
Speaker 5
Confidential. It's not classified. I don't think it's classified, just confidential.
Gregory Meeks
We have it available in the SCIF. Okay. As of today, have shipments of the H200s or equivalent chips started to China or Hong Kong?
Jeffrey Kessler
To my knowledge, yes, but very few. And that's something that we provided, we provided a confidential update recently to the committee on that.
Gregory Meeks
So there have been shipments, but you say it is not so we don't know. Do you know how many license approvals have led to the shipment thus far?
Jeffrey Kessler
We do. And again, we've given that information to the committee and I'm happy to provide it to you in a confidential setting.
Again, okay. But we cannot, the American people, it's all confidential and/or in the SCIF. Let's be as transparent... Well, that's because of the statute and the rules around publicly disclosing information related to license applications. There are restrictions on my and my agency's ability to publicly disclose information about license applications, but we do try to make it available to the committee and we have done that.
But I think for the American people, the bottom line is very few shipments against licenses for H200s and equivalents have taken place. It's a very small quantity of chips, so it's trivial, a trivial amount. Well, I just think, and I will take advantage if the Chairman says it's in the SCIF, I will do that, but I would hope that we could be transparent to the American people so that everyone would know. So, per the Export Administration's Regulations, the EAR, the Department of Defense, Energy, and State have the authority to review any license application submitted under the EAR. For every single H200 license BIS has approved to date, so whatever that number is, they have the authority to review license and the applications that's been submitted.
Speaker 14
So my question to you is, did all three agencies formally review and sign off?
Jeffrey Kessler
Well, all three agencies, all four agencies, review license applications for the H200 and provide their recommendations. So that's the process that we follow.
Jeffrey Kessler
Well, I'm not going to comment on the positions that agencies took in a deliberative context, but all the agencies review all the H200 and equivalent license applications that we receive.
Gregory Meeks
Well, shouldn't we know because I need to know and I think the American people need to know whether any agency's opposition, for example, was overridden or was any agency simply never given the opportunity to review. You know, we have oversight responsibilities here in the United States Congress. And so to not know whether or not all three agencies checked off on this as required by law and or whether or not they had the opportunity to review is something that we need to know. Can you give us an answer to that?
Jeffrey Kessler
Well, I'm testifying now that all agencies had the opportunity to review these licenses and also that the positions and the views that each agency takes in the context of an interagency discussion is deliberative and I'm not going to comment on it. Again, lack of transparency. Let me just ask this last month the Department of Defense published its latest Chinese military companies list. Interestingly, since December, BIS has approved licenses to sell H200 chips to at least four companies that are on that list, including three that were just added last month by this very administration. Can you explain why BIS approved licenses for H200 sales to companies that the Department of Defense deems to be Chinese military companies?
We grant H200 licenses based on a rule that we issued in January, which explains the criteria that we examine for reviewing these licenses on a case-by-case basis rather than a presumption of denial. And the applicant has to meet rigorous national security requirements, including making sure that the chips actually perform at the level that they're supposed to perform at and not higher, getting inspections, domestic availability of comparable chips, and so on. So that regulation has the basis for the decisions that we make in any particular case. And you know, and there have been, just to be clear, I mean, there are cases where we approve the license applications we receive, there are cases where we deny the license applications we receive. So we examine each one closely on a case-by-case basis.
Gregory Meeks
Mr. Chairman, before I yield back, I'd just like unanimous consent to submit into the record the Department of Defense's 2026 list of Chinese military companies that was published on June 8th, 2026, and the Federal Register notice from January.
Without objection.
Representative Biggs is recognized.
Nancy Mace
Thank you, Mr. Chairman. Under Secretary Kessler, thank you for being here today and thank you for your leadership at BIS in putting American national security and our American workers first. The connected vehicles rule is exactly the kind of bold action that President Trump promised the American people, using our full authority to keep the Chinese Communist Party out of our critical infrastructure and out of our driveways. It should terrify every single American to think that Beijing could remotely access or even control cars on our roads. And I want to commend BIS's recent decision to deny the EV company Polestar, which is owned by Communist China's Geely, authorization to sell 2027 model year vehicles in our country.
I raise this because it matters directly to my home state of South Carolina. The Polestar 3 is built in Charleston in the same plant that builds Volvo vehicles. And Volvo has been owned by Geely since 2010. BIS approved Volvo to keep selling here while denying Polestar. I don't doubt there are good reasons for that distinction, but South Carolina auto workers, the suppliers, and dealers, they have naturally been asking what separates a yes from a no, and I think giving them the clarity would help BIS' mission.
So I have three questions. The first, even in general terms, what separated the Volvo approval from the Polestar denial so that our manufacturers have a clear roadmap to follow?
Jeffrey Kessler
Thank you. Thank you very much for the question, Congresswoman. For any, so the, there's a general prohibition on the import of technology, software, starting in model year 2027, that has foreign adversary technology. And we were able to reach an agreement, a specific authorization with Volvo that we believe is very strong, very robust, and effectively mitigates the national security risks that we believed otherwise would have existed. You know, we just were not able to reach that kind of agreement with other companies that we have denied, and that's the difference.
The details of of those are are confidential.
Nancy Mace
Thank you. So secondly, are there other China-linked automakers currently under BIS' review through the same process?
Jeffrey Kessler
There, there have been multiple companies in similar situations that are before us, both automakers and suppliers.
Okay, my third question. As South Carolina continues to grow as an automotive manufacturing powerhouse, how is BIS making sure this rule keeps the Chinese Communist Party out of our supply chains while ensuring that America wins the future of the auto industry?
Jeffrey Kessler
Well, you know, I think it's about creating and standing up this strong new rule and then enforcing it effectively. And that's exactly what our office, our OICTS office is doing right now. This is a whole new program, a first-of-its-kind rule under this authority. There's never been this type of program established under this legal authority. And, you know, we're setting up right now the enforcement apparatus to make sure that importers and dealers and manufacturers all adhere to the rules, that when we enter into an agreement like the one that you, you know, that I referenced with Volvo, that the terms are abided by.
And so, you know, I think strong enforcement of this rule and continuing to work closely with industry is how we make sure it remains successful.
Okay, thank you. Mr. Chairman, I yield back.
William Keating
Thank you, Mr. Chairman. Kessler, are you familiar with the UAE-based company G42?
I am.
Who is that?
Sheikh Tahnoun in other ways.
Sheikh Tahnoun?
Speaker 20
Yeah. Are you aware of his other position, Sheikh Tahnoun's other position with UAE government?
I'm aware that he has a position with the UAE government.
And what is that position?
I don't know offhand.
Speaker 20
He's National Security Advisor. So, are you aware also that in the course of export controls, I mean, the very powerful semiconductor chip deal that was done in May, did you have other discussions as a member of the administration with other members of the administration on that change for those very powerful, sensitive computer chips that we were worried about getting in the hands of the Chinese? You must have had some discussions with other members of the administration.
Jeffrey Kessler
All all major decisions that BIS makes, we make in consultation with interagency partners in the administration.
Which decision are you asking about?
Speaker 20
About the approval of to G42 and Sheikh Tahnoun about these computer chips that raise security concerns and following the hands of being followed in the in the hands of the Chinese. Who made that decision? Who made that decision?
Speaker 20
Sir, you're aware, but who did you have any discussions at all with Steve Witkoff, who's the envoy in the area? Certainly he would be someone that would have you'd have a discussion with if you were dealing with G42 transfers and dealing with that area since he's the envoy of the Middle East.
I'm not going to comment...
Why not?
I'm not going to comment...
Why not?
I'm not going to comment on discussions...
Why not? It's very relevant, sir.
I'm trying to answer your question.
Speaker 22
My answer is that I'm not going to comment on discussions that I had or didn't have with any particular individual in the administration.
Speaker 21
Good, I'm not asking you to comment on the discussions. I'm asking you who you discussed it with. Did you have a discussion with Steve Witkoff? I don't care what you said to him. First answer the question.
It's no security risk, it's no confidentiality. He's the envoy in the Middle East. Did you have a discussion with Steve Witkoff?
No you're not, you're trying to avoid it, frankly.
Jeffrey Kessler
I'm trying I'm trying to tell you that, you know, I'm not going to disclose the content of deliberations that I...
Speaker 25
I'm not asking the content, sir. I'm first asked you, did you have the conversation? At least you can share that with us.
I'm not going to provide a chronology...
Speaker 23
You're not going to No, no, no. I didn't ask for chronology. I asked you, did you have a conversation with Steve Witkoff?
Speaker 21
No you're not, you're trying not to answer. So tell me the basic question, did you have a discussion with Steve Witkoff? That's pretty simple.
Speaker 21
I didn't ask you for an inventory. I didn't ask you for content. I asked you a pretty simple question. Did you have a discussion with Steve Witkoff?
I don't want to provide...
Speaker 21
You don't want to provide, of course you don't. Tell me the simple answer. This is so elementary. It's not covered by any confidentiality, it's not anything. I'm not asking for content.
I'm asking for an answer.
Speaker 21
No, I'm not asking about deliberations. I'm simply asking you, had you had the conversation with Steve Witkoff about this? I'm not asking you content, deliberations. You can't answer that question.
Speaker 21
No you haven't, sir. How can you say you've given an answer? There's nothing more fundamental or simple than I'm asking you.
Did you have a conversation with Steve Witkoff about this?
Speaker 30
I'm not going to provide an inventory of individuals... Why? Why aren't you doing that, sir? Because it's deliberative. It's deliberative.
Right?
Speaker 21
I'm not going to provide... You're evading the answer, sir. Why are you evading the answer? Because it's... Why are you evading the answer?
Could it be the conflict of interest that's there with Witkoff and World Financial and the Trump administration, which the president personally benefited by? Could it be that? Could it be a fear? Are you afraid to give an answer, sir? I'd be happy to give you an explanation.
Speaker 49
You're not happy to give me an answer. I can't believe that you won't even admit if you had a conversation with Steve Witkoff about this. Mr. Chairman, I yield back.
Warren Davidson
Thank you, Chairman. Thank you, Mr. Kessler, for being here today and for just providing clarity about the role the administration's doing to protect our national security. And I appreciate you doing that. You know, one of the things that we've spent a lot of energy on is getting an export control framework together. We worked, you know, across not just State Department, but Commerce, Treasury.
You know, this is kind of a whole-of-government effort. And, you know, the budget needs to increase to be able to accommodate those kinds of roles. Could you give us an update on how that's going and how important it is to not only create the authorization, but the fund the office that you guys need to provide this oversight?
Jeffrey Kessler
Absolutely. Well, enforcement is really at the heart of the work that BIS does. Enforcement is the reason that, you know, that the export control regime is effective. Enforcement is what creates the incentive for companies to comply, and it's what keeps the technology that we all care about out of the hands of our adversaries. Now, you know, we have surged enforcement, thanks in part to the additional appropriations that Congress has provided for fiscal year 26.
We've hired a huge number of people just this year already, around 70 people, and we plan to continue hiring throughout the year. But as I mentioned in my opening testimony, I think that BIS ought to be orders of magnitude bigger to effectively fulfill its enforcement mandate. Now, we know that our enforcement officers are overburdened. We know that there is illegal activity happening that we're not able to stop because of the paucity of resources. And so we're asking Congress, the president's budget asks Congress for an additional significant increase in resources so that we can continue transforming BIS into an enforcement powerhouse.
Warren Davidson
Thank you for that. And thanks for the additional explanation. And look, one of the things we want to do is make sure we have bright-line clear things so there's not some unambiguous standard out there, that it's not regulation by enforcement, but companies are clear on what they're supposed to do. Toward that end, I've passed, working to pass, a bill, the Biological Intellectual Property Protection Act, that would restrict the export of US intellectual property and sensitive information related to synthetic biology to foreign entities like China. We know this has happened in the past.
We're concerned that it could happen in the future. You know, how important is it to have bright lines? Does that make enforcement easier?
Speaker 45
Well, it sounds like it would be helpful. And I'm happy to take a look at the legislation and work with your office on it.
Warren Davidson
Yeah, thank you for that. And, you know, one of the early enforcement actions really has been AI. And one of the most important technologies we're trying to restrict is related to computing, whether it's quantum computing, chips, technology. But artificial intelligence is a bit of an arms race of sorts with China. And, you know, sort of a rapid enforcement action against a version of Claude happened already.
So I know that the details of those discussions and negotiations are confidential or classified generally on some of these things. But could you go into the kinds of things that are considered as you're trying to take an urgent enforcement action like that?
Jeffrey Kessler
Yeah, absolutely. One thing that we expect of companies that are involved in developing frontier models is that they follow the procedure and the policy that's set out in the president's executive order on AI from June.
And that's an important step, both in ensuring the security of the models and in instilling confidence in the government that if there are vulnerabilities that we uncover them, we know about them, and we're prepared to deal with them. The government has several bodies that work with companies to evaluate the security of frontier models, including CASE at the Department of Commerce, not in BIS, but it's at the Department of Commerce. And so we encourage companies developing these types of models to work with us closely.
Warren Davidson
Yeah, thank you for that. And then, you know, I think one of the concerns a lot of my constituents have is their data, their private information. Frankly, they're concerned about our own government collecting their information. They're concerned about companies monetizing and harvesting it. Some of that's outside your control.
We need a domestic privacy bill. But when you look at crossing the border, how are we protecting Americans' sensitive, personally identifiable information, geolocation data, all kinds of things that you can buy from data brokers? How are we limiting the export of that kind of data?
Jeffrey Kessler
Well, some technical data is controlled, so it falls under the export controls, and that's one thing that we're doing. And there are other authorities too, for example, that the Department of Justice has to limit the export of sensitive personal data. So there's a variety of legal tools both inside and outside BIS that we can use.
Representative Bera.
Ami Bera
Thank you, Mr. Chairman. On behalf of my colleague from Massachusetts, I'd like to ask unanimous consent if I could enter two articles into the record. Thank you. Thank you for being here, Secretary Kessler. I have the privilege of serving on the Intelligence Committee as well.
And one thing that we think about, let's use Mythos as an example. I think Anthropic did the responsible thing as a company when they realized some of the powerful tools that were becoming available, coming to the government, working with folks to make sure there was responsible application of these tools. Within BIS and within Congress, one thing that we think about with the frontier labs that are out there, with how rapidly these technologies are emerging, do you have the tools or do we have the authorities in place that compel these companies to come to us as the federal government to say, hey, here's a tool that we may not want our adversaries to get a hold of, we may not actually want our own public to get a hold of yet, we don't fully understand? Does that make sense? You get what I'm thinking about.
And this is a place where I think the administration, not in a partisan way, but in a national security way and a way of protecting the public, because we see how fast these technologies are evolving.
Jeffrey Kessler
Right, well, thank you for the question. I think that we showed the world that we do have the tools in the case of Anthropic. Right, we had national security concerns and we responded quickly to address them and to control the dissemination of the model. And we worked with Anthropic to address our concerns and Anthropic responded admirably. And after too much time had passed, we lifted the controls and ensured that they continue to work with us as they develop guardrails and make sure that their model is secure.
Ami Bera
And again, I applaud Anthropic for doing the responsible thing and the right thing and working together with us. What I worry about, though, will that next frontier lab, will that next company that comes across a very powerful model or powerful tool do the right thing? I hope they do. But, you know, what are the tools and things that we should be thinking about as the federal government to create a compelling narrative that says, hey, wait a minute, you have to work with us here on this.
Jeffrey Kessler
Absolutely. Well, so I think, you know, as the executive branch, we work closely with all the frontier labs, all the American frontier labs, and encourage them to cooperate with us closely as they develop and prepare to release these frontier models. We work with them to assess the security risks. Then again, that's done through parts of the government like CASE, which I mentioned, through the White House. And they know now that if there's a company that isn't following the rules, isn't following the pathway that's set out in the executive order from June, that we have tools at our disposal to limit the dissemination of the models.
Ami Bera
I mean, I guess one thing that I would encourage the administration to work with Congress, because I do think it would be important for us to put those guidelines in place, to put kind of the code of conduct. Again, I do worry about how quickly things are evolving. I do worry about whether these models get in our adversaries' hands. Again, you do, coming from California, you see a lot of the innovations that the frontier labs are doing. And I don't want to just hope that each lab will do the right thing.
I want to have a compelling case that says, hey, here's the guidelines, here's the things that would compel you to come to the administration and compel you to come to Congress.
Jeffrey Kessler
Yeah, I mean, look, I agree with you and I agree with the concern that you're expressing. This is obviously a rapidly evolving landscape. It's a new world. And we're developing, we've used and we're developing new tools to encourage cooperation with the government. And we're also, you know, developing the framework for frontier labs to cooperate with the government and to make sure that our concerns are addressed.
Ami Bera
Right. And again, I guess I would argue, and I think for this committee as well as for Congress, that we ought to work with the industry. Again, I suspect most people want to do the right thing. We ought to work with the administration. Shouldn't be a partisan issue.
It should be an issue of how do we protect our intellectual property, our advantages, but also our national security and safety. So again, I would look forward to working with your office as well as others to try to create those guardrails and industry.
I yield back.
Representative Issa.
Darrell Issa
Thank you, Chairman. Mr. Kessler, I appreciate that you've been very available for conversation and correspondence. So I hope you'll take my opening here as positive. First of all, would it surprise you to know that during the four years of the Biden administration, Applied Materials grew by 6%, Lam Research shrunk by 18%, while the Chinese makers, including NAURA, grew by 93% and AMEC grew by 254%? Are those figures that you'd find credible and not surprising?
Darrell Issa
Would you find it credible that it hasn't really reversed by very much, that those Chinese institutions continue to grow by double and triple digits, while American companies find themselves still behind the power curve on regaining their volume and dollar leadership?
Speaker 57
So as we look at this and by the way Mr. Chairman I'd like to put in for the record with unanimous consent an article from Bloomberg, secretive Chinese chipmaker is built to dodge US curbs.
Without objection.
Darrell Issa
Thank you. Your title is an amazing one. First of all you're part of the Department of Commerce meaning that your job is to promote commerce. Business industry and security is an interesting two-part obligation isn't it, both to promote our industry and protect it and then the security side of it in your case primarily on exports, right?
Speaker 57
That's correct. And more broadly Commerce is dealing with both exports and imports from a standpoint of protecting industry.
Darrell Issa
Correct. So for the record here is one of the challenges that you face that we have to support through our funding and authorization the balance between our industry which is a global industry when we look at chip production, chipmakers and the products that allow for those making, they cannot be global leaders if they are cut off from substantially half or more of the market, is that correct?
Jeffrey Kessler
Well I think it's important for it's important for the United States and for the Department of Commerce to support and protect the industry that makes the tools that make the semiconductor industry.
Darrell Issa
I appreciate that and that's why I brought up those companies. If we take for example Qualcomm in my home district, Qualcomm lost in the 5G race. China won. It wasn't because they didn't work hard, it was because China owned the market for the utilization. If they had a chip that worked they got first dibs on it.
That balance is one that we failed in. In other words today many of our chipmakers find themselves with only one market to sell through to the global market and that's China, meaning that their chips have to pass from here through China to get to Europe and the other countries because the products are substantially assembled in China. That's a fair statement isn't it?
Jeffrey Kessler
Look, you used the word balance and I agree with you that it's important to find the right balance, right? We want to make export markets accessible for our companies and we also want to make sure that we respect national security. And in this case we're talking about a set of technologies as you know, talking about a set of technologies that are very sensitive from a national security perspective.
Darrell Issa
Well here's my conundrum and it's one you and I have spoken about before but I want to make sure we put it in the record. You have an average of 66 days or so for approvals and that sounds pretty laudable, about two months between application and approval. However the companies that we've been talking about, the chip manufacturers, the manufacturers for the chips, the Nvidia type companies and beyond, they don't find 66 days. In some cases they are undesignated and they are part of the I don't have an answer ever. So how do we go from a good average which includes somebody making gun parts, all the possible controlled items, and get down to the global leadership areas, quite frankly the one, two, three and four and five trillion dollar companies in which America dominates however China assembles.
How do we get it to where it's 66 days for those companies because I'm concerned that one thing we know is they're not getting the quick answers, in some cases they're not getting the approvals at all or the denials.
Jeffrey Kessler
Well, that's, that's true. So the, you know, in the vast majority of cases for licenses that we handle, approvals, decisions and approvals come quickly. As you said, you know, it could be as little as two weeks, it could be a month or two. And again, that's the vast majority of cases that we handle. One of the changes that I've made and one of the changes that I committed to make when I was going through my confirmation process was to stop the rubber stamping of licenses that involve serious national security equities.
As I mentioned before, under the prior administration, there were thousands of licenses granted to entity-listed companies, and I think that's not the outcome that the members of this committee expect to see. And so I have been, BIS, you know, under this administration has been applying more scrutiny to those licenses where there are national security equities. And I think that that's the, that's the right outcome. So, that's, that's how the licensing process is working now. And again, I think that it's entirely appropriate that when there are serious national security equities, we take a close look, we would involve technical experts within BIS, we would make sure we would talk to the companies, make sure that we understand from the company's perspective what the reasons might be for granting an export license application.
And so we're very thorough.
Speaker 53
Thank you, and thank you for the extra time, Mr. Chairman. I yield back.
Representative Kamlager-Dove.
Speaker 60
Secretary, Under Secretary Kessler, thank you for appearing today before this committee and for meeting with me two weeks ago. You are charged with leading one of our most important national security agencies at a critical moment in world history as AI technology transforms society, and that is why your job is so important. Restricting the sale of our most advanced AI chips to China is a national security priority. Would you agree that we must maintain our competitive advantage with AI over China?
Jeffrey Kessler
Well, thank you. It's good to see you again, Congresswoman, and I appreciated the meeting with you too. And yes, I think it's essential that the United States maintain its lead in AI, in quantum, in semiconductor technology, and all the sensitive technologies that are going to define the economic competition of the 21st century.
Speaker 61
Thank you so much. I too agree with you. So last week, you and Secretary Lutnick loosened export controls on the United Arab Emirates, making it easier to export advanced AI chips, military equipment, commercial satellites, and spacecraft. Specifically for this hearing, the rule allows the UAE government and designated companies, including Emirati AI leaders like G42 and Core42, to access advanced AI chips and servers without needing individual licenses. So the conflicts of interest between the president, his son, and any dealings with UAE are rampant.
Donald Trump Jr. and Eric Trump co-founded World Liberty Financial. In January 2025, just before President Trump was inaugurated, a UAE royal, who is the UAE national security advisor, purchased a 49% stake in World Liberty Financial, reportedly netting Trump $263 million. In May of 2025, World Liberty Financial announced that its new stablecoin, USD1, would be used by Abu Dhabi investment firm MGX to finance a $2 billion investment in crypto exchange company Binance.
And who is the chairman of MGX? That same UAE Royal National Security Advisor who bought 49% stake in World Liberty Financial. Now, we have your announcement easing export controls on, you guessed it, the United Arab Emirates, who now stands to gain access to frontier AI chips. So I have to ask you, Secretary, have you or Secretary Lutnick had any discussions about the UAE and World with World Liberty Financial or members of the Trump family?
Jeffrey Kessler
No, not from me. But, you know, what I can tell you is that this UAE decision that we made, I believe, is an appropriate revision to the export control country groups that recognizes the UAE's status as a key ally in the region.
Speaker 60
Right. I want to I have limited time. I want to appreciate that you said no, not from you. I am curious about Secretary Lutnick and I'm curious to know if there have been any correspondence, any emails, any disappearing signal chats, any meetings that you have seen or you have heard. And the reason why I ask is because Secretary Rubio came here just not long ago and when asked similar questions, he said, well you, Congresswoman, just don't know where to look.
So I want to ask, where should we be looking? Where should we be looking for this information? Because I have to tell you, it smells of conflict of interest. It smells like it could be an illegal pay to play scheme and you are an accomplished lawyer. You went to Yale, you went to Stanford, you know about these things and you, I believe, would know an illegal pay to play scheme when you see it.
And the reason why I ask these questions is because when you are written up, when this will be your legacy, this will be your legacy. And if we I hope we do not hear or read about a scheme like we did the mining deal scheme with Secretary Lutnick when it comes to the Emirates and these chips. And I hope that your name is nowhere on those correspondences or signal chats or meeting dossiers that come up.
Jeffrey Kessler
I will be proud for the actions that we've taken including with respect to the UAE to be part of my legacy and what the administration does. I think that forging closer ties with the UAE, encouraging the UAE to invest in the US tech stack, encouraging it to invest in US AI data center buildout, strengthening the partnership between the United States and the UAE, I think that it is one of the one of the most significant achievements of the administration.
Speaker 54
Well, if there's a pay to play scheme, just know the Supreme Court protects the President, it doesn't protect you.
Representative Huizenga, you are recognized.
Speaker 41
Thank you, Mr. Chairman. I want to start by asking for permission to enter into the record a letter that was sent to Secretary Lutnick October dated October 30, 2025.
Without objection.
Speaker 41
And Mr. Kessler, in this in this letter, Chairman Mast, Chairman Molinaro, Chairman Garbarino, Chairman Crawford and myself identify high risk tech sectors such as advanced medical equipment, industrial machinery and robotics, energy generation and storage, subsea cable systems and semiconductor manufacturing equipment that need to be addressed using ICTS authorities to protect the US market from technology threats.
However, since then, there has been no further action beyond enforcing the Biden-era policies. It's my understanding that Secretary Lutnick is excited to use these authorities to protect critical US sectors from CCP technologies. Has anyone instructed you not to use the ICTS authorities to protect US technology sectors from the Chinese?
Jeffrey Kessler
Look, the decision to use ICTS authorities in any particular case, it would be a decision that the administration makes.
I understand, but nobody has instructed you not to.
Speaker 50
For any decision that we would make, we would consult with other parts of the administration. We make sure we move forward in a coordinated way. We're a team, and there are sectors where we're concerned about possible espionage risks, infiltration, data exfiltration.
Speaker 37
I got it, and this is now taken up half of my time, which I thought was going to take a minute, because I'm not getting what I thought was going to be a simple answer. So, you and I talked a little bit about this yesterday, about no rulemaking that has been attached to this, and why that might be the case. You indicated that you would be willing to work with me on that.
Of course.
Speaker 43
Okay. This has to be addressed. We have not, I mean, from October, you've got the chairman of Intel, chairman of Homeland Security, chairman of the China Select, chairman of the Foreign Affairs Committee, and I'm just a little old subcommittee chairman who happens to have operational responsibility for this. It just boggles the mind that this administration is not utilizing their relationships here on the Hill to be able to address these things. I'm going to have to hit two other things.
BIS is supposed to close loopholes, not create new ones. I know you and I had some debate back and forth about whether this is a loophole or not about the Blackwells in China. Why did BIS issue guidance in May 31st saying that Chinese companies can keep any Blackwell chips that they had bought? Whether those were legally or illegally obtained, shouldn't you be clear with the Chinese that they can't keep any Blackwells that they may have gotten through either smuggling or other loopholes?
Jeffrey Kessler
The guidance that we issued on May 31st clarified and reaffirmed a pre-existing policy that had been in place since November 2023. And that is that companies that send advanced AI chips to countries in Country Group D or companies that are headquartered there but located outside Country Group D5, that they need to get a license from BIS. And if they hadn't, it would be a violation. And what the guidance says is they should self-disclose.
Speaker 43
And shouldn't there be a little bit more behind that? Okay, I got to move on because this is a multiple conversations that we have had. That is just a freaking circle that you talk in. And I'm sorry, but this is unacceptable. So, let's talk about CXMT, which I understand from your conversation with the chairman you have a less clear view of their standing within China.
We've already seen strict export controls on US companies to sell technology to the memory maker CXMT. Our allies don't. Key Dutch company ASML even has a friendship garden, whatever the hell that is, with CXMT. So it's hard to imagine anything more America-last than letting our allies sell to our adversaries when we don't. So I want to know what are you going to do about it and what's the administration going to do about it?
Jeffrey Kessler
Well, I agree with you that this is a major concern. And you're right that our companies aren't able to sell to CXMT. And we're concerned. I'm concerned about the article that you mentioned, and we raise it directly with our counterparts, including in the Netherlands. And I was in the Netherlands a couple of weeks ago raising these concerns.
We continue to seek alignment. We continue to insist that the backfilling by foreign companies and foreign countries on export control stop. And we're not going to rest until we achieve that.
Speaker 39
It doesn't seem that's the case. With that, Mr. Chairman, I yield back.
Speaker 46
Thank you, Mr. Chairman and the ranking member. Effective export controls depend not only on strong laws, but also on a robust US diplomatic and enforcement presence overseas. Today that presence is under strain. Dozens of ambassadorial posts remain vacant, and many of our embassies and diplomatic missions are operating with reduced staffing, which limits our ability to engage foreign partners and enforce US policies abroad. Export control officers are BIS's frontline enforcement officials overseas.
They monitor compliance with US export controls, investigate potential violations, and work with foreign governments to protect sensitive American technologies. In 2024, BIS approved licenses for over 500 billion dollars in exports. Yet BIS had only 11 or 12 export control officers stationed at US diplomatic missions around the world. Mr. Kessler, how many export control officers do you currently have stationed in China?
Jeffrey Kessler
In China, there are three. But I agree with you on the importance of having...
Speaker 48
Well, hold on, I want to follow up with my limited time. What more needs to be done to bolster BIS's enforcement efforts and its ability to conduct end-use monitoring in China?
Jeffrey Kessler
Yeah, let me just tell you that, you know, when I came into office, there was only one in China. Now there are three. We believe, and I think agree with you strongly, that we should be increasing the number of export control officers worldwide. And we have a plan in this fiscal year to bring it up to 25. And in the president's budget, if it's approved, we would be able to bring it up to 65.
And that is getting closer to the level where I think we need to be.
Speaker 46
And so the budget request calls for, on that note, for a large increase in export control officers. How many additional will be focused specifically on China first?
Jeffrey Kessler
Well, we haven't, we haven't assigned each of the 65 to countries, to specific countries.
Jeffrey Kessler
Yeah, yeah, but what I can tell you is that, you know, it's important to have not just export control officers in the country, but also in countries where we're concerned about diversion.
Speaker 47
I get that, but I only have five minutes. So, in, in China, how many do you, how many will be focused on China?
Jeffrey Kessler
Well, you know, I don't have, I don't have a number to give you right now. I haven't assigned the 65 to individual countries, but I can tell you that we're going to continue to focus on the risk of diversion to China and other country group D countries.
Speaker 47
Well, what about Russia? How many do you, how many will be assigned to Russia? Have you thought about that?
Jeffrey Kessler
We, we typically focus the, uh, export control officers on countries where we're concerned about diversion, including to Russia. And so, you know, for example, I believe that we have one in, in Finland.
Speaker 47
I, I want to stay focused on the questions just again, just because I'm limited in time. So, you don't have a number yet as far as Russia either, is that correct?
Jeffrey Kessler
I don't have a number, but I'd be happy to follow up with any other information that I can give you.
Speaker 46
Fair enough. Regarding Russia, it is known that Russia continues to rely on third, third-country procurement networks to obtain controlled technologies. What additional authorities or international partners does BIS need to more effectively disrupt these networks?
Jeffrey Kessler
Well, I think it's about enforcement resources. It's about, uh, making sure that we can track multiple national security challenges at once. And that's the reason that we've been pursuing the, uh, the enforcement surge this year, um, that we requested additional enforcement resources for this fiscal year and a massive, uh, increase for the next one. I think it's about making sure that BIS can become an enforcement powerhouse.
Speaker 46
Last year when the administration signed AI deals, AI deals with the UAE and Saudi Arabia, it signed agreements with both of those governments to put security guardrails in place to protect US technology and prevent access to US technologies. Okay. Why are we placing, why were we placing those guardrails? Was it to prevent diversion to China?
Jeffrey Kessler
Well, when we make deals with other countries to facilitate the export of advanced AI chips, we want to make sure that we're doing that in a way that's consistent with national security. Right, we welcome other countries, including Gulf countries' investment in American technology. We welcome their decision to build their own tech infrastructure on the American AI stack, um, and we also are mindful of national security and want to make sure that we're clear about what our expectations are.
Speaker 52
Your time has expired. Thank you. Representative Kim.
Thank you, Chairman. Under Secretary Kessler, thank you for coming and testifying before us today. As you know, Chinese companies are not allowed to buy America's most advanced AI chips. So what do they do? They go straight to the source and hire companies like TSMC to manufacture the chips for them.
And they hide these activities by creating shell or front companies. In 2024, TSMC-manufactured AI chip was discovered inside Huawei's hardware by research firm TechInsights. This was traced to a Huawei front company called Sophgo that received three million AI chips from TSMC. And following that revelation, BIS put in place the foundry due diligence rule to make sure chipmakers like TSMC do not accidentally make more AI chips for Huawei.
But there are now questions about whether overseas Chinese subsidiary companies in places like Malaysia and Singapore are exploiting a loophole. So, Under Secretary, pursuant to the foundry due diligence rule, are you currently enforcing a license requirement for a chipmaker to be able to build AI chips for unapproved companies operating outside of arms-embargoed countries?
Jeffrey Kessler
Well, thank you for the question. What I can tell you is that if a, if a foundry like the one you mentioned provides advanced AI chips to a front company for another company that's in country group D5, that would absolutely be a violation. That would be something that we could investigate and enforce against. And that's under the current rules. So I don't think that this is a loophole.
I think it's quite clear.
Speaker 52
Okay. We are, we want to make sure that you are actually enforcing the current rules in place and then of course, you know, we don't want to make sure that we do not, you know, allow China to be able to go behind our backs and I need to make sure that BIS is enforcing it as strong as possible.
Speaker 52
Well, last June, you testified before the our before our subcommittee on South and Central Asia that export control alignment with Japan and the Netherlands remains, quote and unquote, incomplete. But that's been one year since you said that. So Dutch and Japanese companies continue to sell chipmaking tools or provide service and repair services to more advanced chip factories in China that US companies are prohibited from selling to or working with. So can you provide any updates on BIS's progress on aligning our export controls on chipmaking equipment and have you set any specific deadlines?
Jeffrey Kessler
Well, thank you for the question again. You know, what I can tell you, and I, I need to respect the confidentiality of diplomatic discussions that I have, I can tell you that there is cooperation with foreign governments on, on export controls, but I, I unfortunately, I have to report that the cooperation remains incomplete. There's still more work to do. And that's a conversation that I have constantly, particularly with allies. And so there's more work to do.
Speaker 52
Certainly. You know, BIS has historically worked with the private sector through technical advisory committees as well as internal compliance departments. So Under Secretary, you have previously discussed the importance of a dialogue with industry given the speed and the scale of the technology that is under your jurisdiction. So can you talk about the collaboration between BIS and the private sector and how the industry assists BIS on issues of compliance or enforcement?
Jeffrey Kessler
Absolutely. Well, we work very closely with industry on a day-to-day basis at all levels in BIS, whether that's answering their questions, helping them understand the rules, or getting input on the rules that we should have and fixes to the rules that we should make. So, you know, both in formal channels and informal channels, we're constantly consulting with, with industry.
Representative Costa.
Speaker 64
Thank you very much, Mr. Chairman. Thank you, Mr. Secretary, for appearing before the committee today. I want to ask you a kind of a threshold question that will be the basis of my other questions. But I know the focus has been on China this morning, but I also believe that both China and Russia pose an adversarial threat to our country and to our allies.
Would you agree?
Jeffrey Kessler
Well, we, we have, Russia poses national security risks. That is true.
Speaker 64
Okay. And just for your, you may know this, but I am one of those members that really disagreed with the President on the handling of the, the issue of Nvidia and the selling of its powerful H200 chips to China. I think that that is in an area where we, a direction we don't want to go. But let me focus on, with regards to BIS's budget, the efforts with Russia. You know, since they launched their illegal invasion in Ukraine in 2022, the United States and G7 countries began using various tools of statecraft to restrict Russia's finance and military capacity, with various degrees of success, one would argue.
A key one, I think, being export controls that have been very difficult. As you know, these tools are central to exerting maximum pressure on Putin in order to end this war, as we all want to see happen, and certainly the President has tried. But at the negotiating table, it seems that in the first three years following Russia's invasion, US has imposed a range of new sanctions, export controls over Russia, with the Biden administration over 700 Russian entities to the entity list. But under the Trump administration, the US export controls on Russia seem to have fallen off a cliff. In 2025, it seems US did not add any Russian entities to the entity list, but it even more importantly, I think, comes to enforcement, obviously, both with us and with the G7 countries.
In Senator Graham's memory, in reference to the sanction bill that he was the, his bill and the proponent, how do you explain this drop-off in the US export controls on Russia? And why, why does it seem in my view that we've taken the foot, the administration's taken the foot off the gas when it comes to exerting pressure? The President likes to leverage and takes great pride in that. We've got great leverage opportunities here. Why?
Jeffrey Kessler
Well, I don't see the same drop-off that, that you do, sir. You know, we continue to enforce, we continue to maintain the export controls that apply to Russia, and we continue to enforce them. And I think the most important step that we can take is to strengthen enforcement across the board.
Speaker 64
Well, I agree, and you answered, I guess, while I was out in another hearing, my colleague's question about adding more experts within BIS in the area of enforcement and as it relates to Russia. Did I hear that correctly, that's that intention to do so?
Jeffrey Kessler
Well, we would, we want to add experts within BIS across the board.
Speaker 64
Well, we need to, and I think we need to strengthen our export controls and how you're going to use this proposed additional funding, I think many of us are concerned with, not only on Russia, but China as well. They pose a threat. I mean, both President Zelenskyy indicated here within the last month they are in retrieving missile that had been sent to Ukraine and crashed, that those components within those Russian missiles had parts, chips, and circuit boards that were manufactured either in the US or in Europe. I mean, that means they're getting around the enforcement, right?
Jeffrey Kessler
Anytime we hear reports like that, we look into them, and that obviously raises a serious question about, about enforcement and adherence to our rules.
Well, enforcement, effective enforcement is what we want.
Absolutely.
Speaker 64
And and it seems to that the the Russians are very cagey and capable, we think from hard experience in the last several years, in circumventing these these sanctions.
Jeffrey Kessler
Well, we're fully committed to cracking down on all enforcement, all circumvention, all diversion that we know of.
Speaker 64
Well, it seems to me that it's important that you report to the committee to the degree of additional funds, and I am one of those that thinks it ought to be you ought to have more resources, frankly, in terms of our efforts to enforce effectively the sanctions both posed toward Russia and China. Do you agree?
Speaker 64
Willing to report back to this committee with the jurisdiction on what progress we can mark here before the end of the year.
I'm happy to work with that, I'm happy to work with you on that, absolutely.
Speaker 65
All right, the balance of my time is expired, more to be continued. Thank you.
And best wishes, Congressman Costa, I don't want to ruin your reputation, but I agreed with everything you said. I now recognize myself, and indeed, Under Secretary Kessler, I'm grateful for your service, but I'm also extraordinarily appreciative of your South Carolina family heritage, and you're you're always welcome back to visit with the family.
But please come back. With the visionary leadership of President Donald Trump and Ambassador Tom Barrack, Syria is emerging as a partner of the United States after 54 years of Ba'athist socialist dictatorship, 68 years of alliance with the Soviet Union. Last Wednesday, Senator Lindsey Graham met with Syrian President Ahmad al-Sharaa in Ankara as both attended the NATO summit. It is so meaningful that Senator Graham changed his position of concern about Syria to support Syria in line with President Donald Trump, give Syria a chance. I am grateful for the issuance of the export license of Nokia for the Syrian parliament.
Thank you, I appreciate that.
Speaker 65
This ensures America is a partner by choice, not adversaries. With the upcoming lifting of the state sponsor of terrorism designation, which I hope you expedite, how do you plan to further ease export controls such as possible for US companies to invest and export to Syria to keep Syria thriving and support the sovereignty of Syria for the benefit of all of the Middle East, the possibility of a stability, peace, and prosperity that President Trump, I think, is correct identifying for the first time in 3,000 years, and with that in mind, what what can we do?
Jeffrey Kessler
Well, thank you, thank you, sir, for the question. You know, I've been proud to support the fresh start that the Syrian people are making and to facilitate increased trade and investment with Syria through the export controls. As I know you know, we issued a regulation last year which eased export controls on Syria, and that's made a big difference, including in the case that you mentioned. You know, right now, there as you mentioned, there was a notification to Congress about the SST designation of Syria, and you know, we are going to talk to our interagency partners, to the State Department, and make sure that we keep the export controls in tune with other changes that are happening to the law so that we can continue to encourage trade and investment.
Speaker 65
And again, what an extraordinary opportunity we have after decades of of socialist rule to have a potential for a free and dynamic and stable and peaceful and prosperous Syria. So I wish you well on that. And I want to join with Secretary or Congressman Costa, there's evidence, disturbing evidence that American components used in Russian weapons of mass destruction. As I have sent several letters to the affected secretaries urging additional measures to be deployed to prevent sensitive technologies from reaching enemies of freedom to kill Ukrainian families. Adversaries should never benefit from American ingenuity.
So grateful as we're pending right now for the Russian sanctions bill to be addressed as the Lindsey Graham sanctions bill as he was a champion for Ukrainian victory. What is being done to close loopholes and prevent American companies from exporting radar components and other sensitive technologies to war criminal Putin?
Jeffrey Kessler
Look, I think in my mind this is about strong enforcement, right? We need to make sure that whenever there's a violation happening, whenever we detect possible violations, whether it's through evidence from the battlefield or evidence from our companies, that we act swiftly to address it. And that's why we've requested the additional resources that we have in the budget to continue to surge enforcement.
Speaker 65
And again, thank you very much for your service and again, I'm so thrilled to find out your South Carolina heritage. It certainly is meaningful to me and my constituents. With that in mind, we now go to my friend from California, Congresswoman Jayapal.
Speaker 72
Thank you, Mr. Chairman, from Washington, but... Mr. Undersecretary, it's good to have you here today. Thank you. Your agency plays an important role in American AI policy. Both foreign and domestic AI companies are actually built on a mass surveillance regime that prioritizes winning the so-called arms race by putting private Americans' information at risk.
Through export controls and other mechanisms, your agency is in a unique position, I think, to ensure that AI systems are safe, effective, and equitable. Last month, shortly after Anthropic released its new Fable 5 and Mythos 5 models, your agency sent the company a cursory letter that a license would be required for any foreign person to access their models. In response, the company shut down access to these models for all users. After two and a half weeks of negotiations between the Trump administration and the company, your agency partially reversed the restriction. Did you participate in any of those discussions with Anthropic?
Jeffrey Kessler
Well, this was an action that was taken under the export control authorities. So yes, I was involved in the actions that we took.
Speaker 72
And is it true that the reason your agency issued the letter was because Amazon CEO Andy Jassy raised concerns to White House officials about the ability to bypass the AI's AI models' guardrails?
Jeffrey Kessler
Whenever we see a risk to national security, whether it's from a frontier model or something else, we want to act swiftly to address it. And that's what we did in this case.
Speaker 67
But did you, were you responding to concerns that Amazon CEO raised to you? Is that where the concern came from?
Jeffrey Kessler
The concern, look, we have a whole-of-government apparatus that evaluates frontier models. It wasn't just, you know, it wasn't like based on a phone call, it was based on our evaluation of the risks of the dissemination of the model and our concerns about what we didn't know. And that's why, you know, that's why we issued the controls. We worked with the company. They cooperated over the course of a few weeks admirably with the administration.
And when we were able to resolve our concerns and ensure that they would continue to work with us and continue to help us understand the vulnerabilities in the models, then we lifted the controls.
Speaker 70
Thank you. I ask because there's a Politico article that suggests differently.
It says that Amazon, quote, raised concerns to the White House and, quote, was responding to an administration request for feedback. And so I guess what I want to know is, did you, did your bureau make an independent analysis of the security risks? You can just say yes or no.
Jeffrey Kessler
Well, you know, the, the assessment of the risks is not housed in BIS in the first instance, I would say. You know, I mentioned Casey before when we were talking about this topic.
Speaker 72
I guess I'm just asking you what independent analysis you made separate from a phone call from the CEO of a major company that was concerned about competition. Did, I'm wondering if you actually went through an analysis of your own and whether the other three agencies with jurisdiction on export controls, that's State, Defense, and Energy, did they sign off on the restrictions?
Jeffrey Kessler
Well, the US government makes its own independent assessments of the risks of frontier models. Absolutely.
The government does, yes.
Speaker 71
And, and the other three agencies with jurisdiction on export controls, they all signed off on the restrictions?
Jeffrey Kessler
Well, when we, when we issue is-informed letters, we don't necessarily go through the same kind of interagency process that we would do when we have a license. But I think it's important to note that the government is conducting its own independent assessment of frontier models.
Speaker 72
Well, that is very important because I do think that at the end of the day, these issues are too complex and important to be decided on political favoritism or the advice of a big tech CEO, even though he's my constituent. Amazon is located right in my district. I want to make sure that we have vigorous export controls and a well-established interagency process. And so in the future, can you commit to issuing rules in the Federal Register with clear guidelines that would apply to all AI companies and models rather than issuing letters to companies on an ad hoc basis?
Jeffrey Kessler
Well, look, I think it depends on the circumstances, but the executive order that the President issued on AI in June is a step towards establishing an industry—
Speaker 70
But it's not this. I mean, the restrictions that you put in place were just for this one company. Are you going to establish clear rules and guidelines, publish them in the Register so everyone understands what they are, so that there's not a perception that you're favor—you're giving favoritism to one company over another?
Speaker 68
I expect that the government will develop more rules on the release of frontier AI models. Yeah, so I think that that, that's going to happen.
So that's a yes. Thank you.
Jeffrey Kessler
Lady's time has expired. We now recognize the member from New Jersey, Mr. Kean.
Speaker 74
Thank you, Mr. Chairman. And thank you, Under Secretary Kessler, for being here today. America is in an AI arms race with China. As we compete for the latest memory chips, computing chips, and language learning models, America needs to fund and to support robust export controls that place America at the front of the AI arms race. Under Secretary Kessler, whistleblowers have long been a cornerstone of America's intelligence gathering operations.
However, the Bureau of Industry and Security, BIS, does not currently have a whistleblower reward program. Do you agree that a whistleblower program would strengthen intelligence gathering and enforcement efforts at BIS?
Jeffrey Kessler
I think that that, that sounds like a constructive idea. I can tell you that whistleblowers right now play an important role in our enforcement efforts. We have cases that we generate based on credible leads from whistleblowers. So yeah, I think that that facilitating more of that type of activity and disclosure to Commerce is constructive.
Speaker 73
The Stop Stealing Our Chips Act, which I co-led with Representative Johnson of Texas, creates a whistleblower incentive program at the BIS.
Recently, this bill recently passed the House Foreign Affairs Committee with overwhelming bipartisan support and passed out of the Senate with unanimous consent. I look forward to seeing this bill considered on the House floor in the very near future. I also appreciate your leadership in strengthening America's pharmaceutical supply chain and advancing domestic manufacturing. My district is home to numerous rare disease drug developers who are typically small biotechs with only a few FDA-approved products. Their patients are often children who have few to no treatment options.
So I was encouraged that the administration's Section 232 pharmaceutical tariff proclamation, the President recognized that the supply chain of rare disease therapies would receive a 0% tariff rate. Could you provide an update on when the Department of Commerce expects to publish the Federal Register notice clarifying the implementation of the Section 3D 0% tariff treatment for pharmaceutical products?
Speaker 82
Yes. I expect that in the next, I would say, month or two, certainly before, before September.
Speaker 74
Thank you. And will you commit to working with me and the Congress to ensure that the implementation of the pharmaceutical tariffs reflect the unique consideration of rare disease supply chains in order to protect rare disease patients from unintended consequences?
Jeffrey Kessler
Of course, I'd be happy to work with you on that, work with other members of Congress on that.
Speaker 73
Thank you. And then on the third question is, the BIS's export control enforcement work is critical to winning the AI arms race with China. And I'm glad to see this reflected in your robust funding request for the fiscal year 2027. Can you discuss how BIS would leverage the increased funding requested to prevent diversion of AI chips from their intended destination?
Jeffrey Kessler
Well, absolutely. I mean, I think it's more of what we're doing. We already devote considerable resources as a proportion of our, of our budget, we devote considerable resources to stopping smuggling schemes involving AI chips, diversion schemes. And that's what led, for example, to the case that involved Supermicro, which I, I mentioned in my opening statement. I think we just need more of it.
We know that there's more happening. We have active cases. But we're concerned that there are cases that we either haven't detected or that we just don't have the resources to chase down. So again, I think it's, I think it's just about increasing the resources dedicated to enforcement and encouraging the enforcement unit of BIS to do more of what they're doing.
Now recognize the gentleman from Rhode Island, Mr. Amo.
Speaker 77
Thank you. Thank you for being here, Mr. Kessler. As you know, your job is to help American businesses take their world-class products to international markets while protecting our most vital trade secrets. But under your leadership at Commerce, the Bureau of Industry and Security has become less effective and less efficient. You stopped providing the rules of the road for companies operating in China or Russia.
You haven't added a single bad actor to the list of prohibited entities companies can't sell to since October. But all the world's bad actors didn't just disappear last October. The problems are still there and, frankly, you're just ignoring them. Not only are you making Americans less safe by letting the bad guys run rampant through the world's markets, you're actually making it harder for Americans to do business. Delays at BIS have doubled the average processing time for export licensing, causing American businesses to lose contracts and undermining our leadership in technology worldwide.
Right now, BIS has limited engagement with American businesses as they struggle to comply with our increasingly complex export controls. In the past, the BIS provided real support to American businesses, including training seminars and advisory opinions. Businesses knew they could count on BIS. Empowering bad actors while undercutting US companies is the exact opposite of your job, but frankly, that's what you're doing. So, Mr. Kessler, do you want businesses to comply with our export controls?
Yes or no?
Jeffrey Kessler
And I want to clarify a couple of things. One is, I think you said that the processing time has doubled.
Jeffrey Kessler
That's incorrect. The processing time, the average processing time for licenses was 62 days in 2025 versus 60 days in 2024. So it's approximately the same. As far as the entity list goes, what I think is important is enforcing the list. We have a robust list, but it's important to enforce it.
Speaker 76
But so you don't believe that anybody, no, excuse me, Mr. Kessler, so you don't believe there have been grounds to add anyone since October.
Jeffrey Kessler
We have added 140 entities to the entity list, and we will continue to add entities to the entity list when we as an administration think that it's appropriate to do so. But I think it's important to enforce the list. Under the Biden administration, thousands of licenses, thousands of licenses were granted to entities on the entity list. There was rubber stamping happening for exports to entity-listed companies. That's something that has stopped under this administration, and I think that's important.
Speaker 75
And do you think that, Mr. Kessler, Mr. Kessler, but let's go back to my original question. I wanted you to have some time, but my question here is, do you want businesses to comply with our export controls?
Absolutely.
Speaker 77
Then why aren't you helping them when they're begging for assistance? BIS traditionally hosted an annual update conference each March, but that was canceled, and the last conference was in 2025. So why haven't you hosted the annual conference?
Jeffrey Kessler
We keep track of the number of times that we assist companies that approach us with questions.
I asked about the conference.
In 2025, we did it 35,000 times.
Speaker 77
Mr. Kessler, I'm asking, Mr. Kessler, excuse me, Mr. Kessler, I'm speaking. So and I asked you a question. Why haven't you hosted the annual conference?
Jeffrey Kessler
What I'm trying to explain is that we help companies routinely on a daily basis, many times a day, such that in 2025, we did it 35,000 times. And that was more than the prior year, an increase over the prior year. We will continue to host an update conference.
Speaker 78
Okay, so do, so that's answering my question. So you plan to host a conference this year.
Likely this year.
Speaker 77
Good. Okay, because the challenge here is when you reduce BIS's ability to work with American businesses, that's dangerous. It reduces compliance with our export controls, increases the chances that our sensitive technology ends up in adversaries' hands. There are consequences. So just flippantly saying we do it in a lot of ways, but we're going to cut off an essential way is not satisfactory to me.
You know, this is why I introduced the Strengthening Export Controls Compliance Act to require BIS to re-engage with industry. The bill passed this committee earlier this year with overwhelming bipartisan support. So my colleagues share my sentiments. This bill improves compliance with our export controls, strengthens national security, allows BIS to focus on its enforcement resources on bad actors rather than honest mistakes. So that's a win-win.
So here's the top line. I'm hoping that you make the changes needed to restart engagement, to do it with the thoroughness that's required to increase compliance and to protect national security. The stakes are high. And so it isn't just, you know, an informal process. Use the tools that you have at your hand to do something that's important to the safety and security of this nation.
With that, I yield back.
Representative Barr.
Speaker 79
Thank you, Mr. Chairman. Under Secretary Kessler, thank you for your testimony here today.
In response to that last round of questioning, you're being accused of running a less efficient export control system. What is a more efficient export control system? More entities being added to the list, but constant licensing? Or a thoughtful process of adding entities with the proper issuance of licenses without automatic issuance of licenses? What is the more efficient system?
Speaker 79
Yeah, I do too. And I appreciate the administration and your focus on enforcement. Because if you really want to get tough on adversaries and make sure we don't have the technology transfer that we're concerned about, the enforcement piece is really the difference that this administration is making from the prior administration. So for years, we've seen only 11 export control officers stationed worldwide. And these are the officials whose job it is to make sure that the products that we sell worldwide actually go to where they're supposed to go and don't go to where they're not supposed to go.
We had only one single officer in Southeast Asia, a hotbed of smuggling. But now, as you testified earlier, the BIS is in the middle of a hiring surge of new export control officers. So elaborate on BIS's plan for deploying these new export control officers. Where will they be stationed? One of my colleagues was concerned that there were not enough in China.
Tell us a little bit about your plans with respect to hiring more export control officers.
Jeffrey Kessler
Sure. So under the current budget, we expect to have 25 in place by the end of the fiscal year. Right now, we have three in China. We're going to have multiple, we already have some in Southeast Asia, we're going to increase that in Southeast Asia. We expect to increase it in the Middle East.
We're increasing it, or increasing our presence in Central Asia. We want to have a presence across the world, anywhere that we have significant American technology flowing.
Speaker 79
Well, this criticism from the other side of the aisle seems pretty misplaced when you're adding enforcement, not reducing enforcement, and you're focusing on the areas where we see most of the problem. I think the criticism needs to be directed to the past, not to the present. Let's talk about AI chip smuggling. Under Secretary, we've banned advanced AI chip sales for China, but Beijing is desperately working to smuggle these products anyway through illegal networks. Epoch AI estimates that between 290,000 and 1.6 million H100-equivalent chips were smuggled into China through the end of 2025.
That could represent about a third of China's total AI chips. How does BIS's new enforcement posture and surge of enforcement take into account the scale and seriousness of this issue?
Jeffrey Kessler
Well, again, we have surged our enforcement efforts. That's why there was an 18-fold increase in penalties imposed from 2024 to 2025. And it's already showing results. You know, there was a Financial Times article recently that said that the price, you know, there is a black market for chips in China, and because of BIS's enforcement activities, the price of smuggled chips had doubled. And that's an indication that our enforcement activity is working to address the concerns that you're raising.
Speaker 79
As you and I have discussed, legislation that I've been working on for years, the new screening for outbound investment was made part of the NDAA. It is now law, the COINS Act, as it's called.
That law was rooted in a recommendation from the US-China Economic Security Review Commission for many, many years. So we now have this new interagency tool to screen outbound investment. And one of the requirements that it imposes on Commerce is, as well as Treasury and the Department of War, is an alignment of these lists. So you manage the entity list, there's the 1268 list at the Pentagon, there's the CMIC list at Treasury. And the idea is that we shouldn't allow US investment into a foreign entity that helps facilitate the development of technology when BIS is using export controls to restrict the transfer of that technology.
Have you begun with the Pentagon, with Treasury, to start to align the entity list with some of these other lists so that the export control system that we have works in tandem with restrictions on outbound investment?
Jeffrey Kessler
These are discussions that we have all the time with the other agencies about the different lists. So yes, discussions are going on.
Speaker 79
Well, just as a friendly reminder, Commerce under this new law is required now to work with Treasury especially in making sure that there's coherence in our outbound investment screening and our export control regime so that we are working in coordination with one another. And I urge you and the other relevant agencies to collaborate and inform Congress according to the new law. Finally, onshoring manufacturing, we appreciate your work, Under Secretary, in advancing the President's America First trade policy to protect American businesses from Chinese trade actions and to support onshore manufacturing. I've heard from a number of companies that are looking to move their manufacturing facilities from outside of the United States into Kentucky in direct response to the President's agenda. As part of your role at BIS, you oversee Section 232 investigations.
How is your department helping these companies expedite their attempts to move to America these supply chains?
Jeffrey Kessler
Well, it varies from program to program, but Section 232 is all about strengthening these critical industries, these critical supply chains. There are different tools that we have available to us for different industries. But, you know, for example, in the pharmaceutical sector, we have a program to incentivize companies that make new investments in US pharmaceutical manufacturing and onshoring their manufacturing capabilities. So it varies from sector to sector, but I can tell you that if there's any companies that you or other members know of that would like assistance in onshoring, we're there to help.
Speaker 86
Well, we've talked about wood products and the dumping problem there. But thank you for your service. Appreciate your answers. I yield back.
Representative Castro.
Speaker 83
Under Secretary Kessler, I want to start with something that I hope that we can agree on. The most capable AI models being trained today, they require large concentrations of advanced computing chips. Is that something that you agree with?
Speaker 85
And would you agree that the Chinese military and entities affiliated with the Chinese military shouldn't have access to these chips to train their own AI models?
Jeffrey Kessler
Well, I think it's important for American technology to be used for American companies in training our models.
Speaker 83
Right. And not Chinese models and companies that are affiliated with their own military.
Speaker 85
Sure. Well, so I guess my question is, on June 8th, the US Department of Defense listed Alibaba, a Chinese company, as having ties with the People's Liberation Army. In May, it was reported that the Commerce Department authorized 10 Chinese companies, including Alibaba, to purchase Nvidia's H200, a highly capable AI chip, as you know.
And my question is, has the Department of Commerce authorized any transactions with Alibaba since the Trump administration took office?
Jeffrey Kessler
All the information about H200s is before the committee. It's confidential, I'm not, I can't discuss it here, but the committee has information about the licenses that we've received.
Speaker 85
No, I understand that in this forum that you can't comment on specific licenses. But would you agree that as a major Chinese company developing advanced AI models while being affiliated with the Chinese military, that American companies should not sell any advanced chips to Alibaba? And if any licenses were granted, will you revisit those decisions?
Jeffrey Kessler
Well, what I think is that it's important that the approach that we've taken is to limit the quantity of chips to any particular company, H200s. First of all, I think it's important to recognize that we're talking about a chip that is several generations behind the leading edge, a chip that American companies aren't buying right now, and that we have an elaborate set of national security requirements that have to be fulfilled in order for us to consider the license on a case-by-case basis rather than under a presumption of denial. We issued this regulation in January, which sets out all those conditions. And so, I believe that the requirements that any company has to meet to get a license, including all the requirements in the January, in the January regulation, including the quantity requirements, those are robust, and those should give us comfort about any exports of these chips. Now, I also want to make clear that there have been minimal exports of any H200s to China so far.
Speaker 85
Well, and I guess, no, and I appreciate the answer, and I'm trying to fully understand kind of the contours of your decision-making, because you made the comment that certain chips are older generation chips than others. So, so I guess, are you willing to sell older generation chips to a company affiliated with the Chinese military as long as it's not the latest technology, or kind of what's the contours of that decision-making without getting into a specific license or company?
Jeffrey Kessler
There are different degrees of sensitivity, right? And that's how our export control regime is set up. There are levels, there are classifications for older technology, for technology that is kind of irrelevant now.
Speaker 85
But just to, just to nail down just an answer to the question, is the Trump administration willing to sell some of these advanced chips to companies affiliated with the Chinese military if the conditions are right?
Jeffrey Kessler
Well, we screen the parties carefully that are the subject of license applications that we receive. So, for example, if a company is on the entity list, we're not going to approve a license for chips to that company. So we would, we would apply a very careful analysis to any license that we get before us. And we have, we have rejected, we have rejected licenses.
Speaker 85
Thank you for that. I have one more subject that I got to get to in my question. Under Secretary Kessler, transnational criminal organizations continue to fuel instability across Latin America and the Caribbean, as you know, and one of the principal drivers of their power is their access to firearms, of which the vast majority are trafficked from the United States. I'm glad that the State Department has acknowledged this issue and is using foreign assistance to help countries track where these firearms are coming from. Do you agree that these cartels, which the administration has designated as foreign terrorist organizations, should not get any weapons from the United States?
Jeffrey Kessler
So, absolutely, we should be restricting the access of cartels to weapons.
Speaker 85
Well, then I guess that's why I'm confused, because in September 2025, you rescinded the April 30th, 2024 BIS regulations that added safeguards for the export of firearms and stopped notifying the Congress about exports of these weapons. And the Trump administration's State Department, if the Trump administration's State Department and Secretary Rubio are trying to help Mexico and countries like Haiti track and stop these firearms from getting into the hands of designated foreign terrorist organizations, then why did you, as the head of BIS, make it easier for these cartels to get weapons by removing the safeguards instituted at BIS?
Jeffrey Kessler
That regulation went far beyond what you're describing.
That regulation established a presumption of denial for 36 high-risk countries. It was extremely burdensome. It cut off, unnecessarily cut off American firearms exporters from, you know, I believe hundreds of millions of dollars a year in business that...
Time has expired.
Representative Self is recognized.
Keith Self
Thank you, Mr. Chairman. Mr. Under Secretary, we have been looking at your, your presentation here and your PowerPoint. There's a lot of positions here. I want to, I want to ask you a question. I want to look at, should we be looking at inputs or outputs?
A lot of the committees that I'm on, we look at inputs. What are we going to do, what are we going to do to add to the department? What are we going to do to encourage growth? But I want to look at outputs here because we were told, not by you, probably a year ago, I don't remember the man's name, that China could not smuggle enough AI chips to overtake the US. It was almost a flat statement.
And I'm not sure they have to, because my question to you is, should we be looking at policy or enforcement? Because your presentation is enforcement-heavy. Let's just be honest. It is enforcement-heavy. I could go through your charts, but I won't.
But the information that we were, we were given, that there are no new export controls on equipment. The license to buy H200 but not Blackwells is, is there. There are no new entity list additions for almost a year now. There are no new location verification controls put in place. So my question is, are we, do we really need to look at enforcement, or do we need to look at the policies that we have in place?
And I understand you may, you have a dearth of employees. But if you'll just take the overall view there of why should we not be looking at some of these policies that seem to be lacking as opposed to only looking at enforcement? Inputs. I want to talk about outputs.
Jeffrey Kessler
Well, I agree with you that outputs are important and outcomes are important. And we should be focusing on the outcome of enforcement and how much, how much are we enforcing? And as I mentioned, we increased enforcement 18-fold from 2024 to 2025. And I think that's significant. Under the prior administration, unfortunately, there were significant under-enforcement and under-deterrence of violations of the laws.
Now, we should look at policy too, and Congress should look at policy too. And we should look at it together and find areas where we think the policies need to be changed. But I don't think that more regulation equates to more national security. And so, you know, what I see as the highest priority for BIS and the biggest hole to fill is in enforcement. BIS ought to be an enforcement powerhouse.
We ought to be, for example, having licensing processes that are rigorous, that appropriately handle applications that involve items of national security concern, not rubber-stamping.
Keith Self
But let's look at some policy that you might take a look at. The AI action plan. So I think you've got the requirement for the policy, the negotiated policies in place, they just haven't been enacted. So I go back to my point.
So I'll leave you with this. What three metrics, if we do this investment and I think you used the term uh I've forgotten the exact term but generational investment or something like that. What are the three metrics that a year from now Congress could say you either met the metrics or you didn't.
Jeffrey Kessler
I think the penalty amounts is the single most important metric, right? I see a huge increase.
Penalty amounts, dollar amounts?
Jeffrey Kessler
Penalty amounts, because we know that there's and I'll tell you why, because we know that there are significant violations out there that are happening. We know that we've made a lot of progress from 2024 to 2025 and we're seeing so far in 2026 continued progress in increasing the penalty amounts. We want to know is BIS catching the bad guys. Is are are the violations getting stopped and are we effectively deterring the wrongdoing that that we know is happening.
Keith Self
So you're not particularly uh fussed about the AI action plan not getting implemented.
Jeffrey Kessler
Well of course we want to implement the AI action plan. There're several parts to the to the action plan, um you know part of it is export promotion, part of it is uh you know semiconductor manufacturing equipment controls, which we're enforcing strongly. Um so absolutely we want to implement that plan.
Keith Self
Uh I think I'm going to submit the three metrics question to you in writing and and just ask you to take a look at that. What do we look at in a year from now for outputs of this investment should we make it. Mr. Chairman I yield back.
Representative Stanton is recognized.
Greg Stanton
Thank you very much Mr. Chairman and thank you Under Secretary Kessler for being here today for this important hearing. It is very concerning that since you took over the Bureau of Information Security BIS in March of last year BIS has published the fewest rules of any year in more than two decades. The administration has also not added any new entity to the government's blacklist since October, the longest period of inaction since 2008, and export license applications have piled up for so long that American companies have lost business waiting for approvals. As rules stall, licenses pile up and the foreign companies that could pose national security risks duck commerce blacklists, sensitive technology has more room to flow to China and other adversaries. And in the absence of action from BIS, Congress has stepped in advancing bills aimed at tightening US AI chip export controls and closing perceived loopholes.
One of those bills is the MATCH Act. The MATCH Act would impose extensive new controls on US semiconductor tools and compel allies to do the same by controlling their tools extraterritorially or by restricting the sale of US components to their comp to their companies. I'm concerned that if passed the MATCH Act will have severe consequences for allied equipment supplier excuse me will have severe consequences for allied equipment suppliers, chip manufacturers like TSMC in in Arizona and Intel also in Arizona rely on. Under Secretary Kessler from your perspective is the MATCH Act the right approach as written do you agree that the MATCH Act would hurt our domestic semiconductor ecosystem.
Jeffrey Kessler
Well there you know there's a policy motivation for the MATCH Act which I appreciate, which is that we need greater alignment between uh the US export control system and foreign export control systems because we don't want foreign countries to backfill. Um you know the administration is going to first of all we're willing to work with Congress on any legislation in this area um and again I appreciate the motivation behind it. We want to make sure that any legislation that's passed uh gives the administration new tools and doesn't constrain its authority.
Greg Stanton
Thank you. Your perspective is very helpful as this legislation advances in the House and Senate. The introduction of the MATCH Act highlighted the importance of achieving export control alignment with our allies. However, reporting indicates that your office has significantly curtailed staff-level engagement with our foreign government counterparts. This is in addition to pulling back from participating in traditional export control dialogues like the Wassenaar Arrangement with allies.
This is a confounding decision given the importance of achieving export control alignment to stay ahead of China in the AI race. Mr. Under Secretary, do you agree that export controls are generally the most effective when they are implemented multilaterally and in close coordination with our allies and partners?
Jeffrey Kessler
I do agree that it's important to coordinate export controls with allies and partners. I also believe, you know, I believe that we need to be protective of taxpayer resources. And not every single convening of export officials in foreign capitals is meaningful. And so we keep a close eye on the travel that our employees conduct.
Greg Stanton
It's been well over a year since Section 232 semiconductor tariff investigations was initiated. Can you give us a status update and can you commit to a rough timeframe for when industry and Congress should expect a determination?
The Section 232 semiconductor tariff investigation.
Jeffrey Kessler
The investigation's complete. The President issued a proclamation. And it described several phases. So that's already happened.
Thank you very much. I yield back.
Representative Fine is recognized.
Randy Feenstra
Thank you, Mr. Chairman, and thank you, Under Secretary Kessler, for being here today and answering all of our questions. I've got a few because I think really what you're doing is incredibly important. So, under President Trump, he's placed BIS as the cornerstone of his AI action plan and America First trade policy. One of the key components of these policies is ensuring that US exports American AI to our allies and partners to prevent their dependence on our strategic rivals' technology. Now, I'm particularly concerned about the exposures of our allies to a malign AI full stack.
We don't want foreign AI to become the standard. We'd like our AI stack at all parts of the value chain to become the standard. It's the differ- it's like VHS versus Betamax, except one of them is American and one of them is not. And so that's why I have filed a bill in HR 6996, the Full AI Stack Export Promotion Act, which was marked up and passed in this committee. Unfortunately, ongoing delays in license approvals and confusion over the future of the AI diffusion rule have caused uncertainty and hampered exports to allies and partners.
Can you comment on BIS's role in facilitating the export- the export of US AI to our allies?
Jeffrey Kessler
Well, I agree with you that it's important to encourage our allies to build and invest in the American tech stack. It's essential. And that's part of the thinking behind the action that we took recently with the UAE, behind the Middle East deals that we've been doing. You know, we want to encourage these companies to build on the American tech stack, to invest also in the United States, in our tech ecosystem. So the- the administration and I personally agree with that 100%.
You know, your- your question referenced some confusion, but I don't think there has been confusion about the rules. I think the rules have been clear. So, and I don't think either that there have been- you- you mentioned licensing. And the timelines for licensing for routine licenses have been quite fast. They've been some- you know, they've been pretty much the same since 2024.
But we do apply a high level of scrutiny to those licenses that involve sensitive technologies.
Randy Feenstra
Okay. So what you've mentioned at a high level, but what specific actions are you taking to speed up the licensing process? And can you give some clarity on if BIS plans to formally replace the AI diffusion rule with something else?
Jeffrey Kessler
Right. I don't want to replace the diffusion rule because I don't think the rule is worth replacing. It's a bad rule. And we're glad that it's gone. We're glad that it's not being enforced.
And it would have, it would have stymied the global AI ecosystem. So we don't want to replace it. There will be future regulatory action in the area of chips and AI. It's a quickly evolving area and the rules need to keep up with it. But, but we're not going to replace diffusion.
Randy Feenstra
So, so the AI action plan specifically calls on BIS to encourage partners to follow US export controls by using tools such as the foreign direct product rule and secondary tariffs. Allied export controls are still significantly weaker than our protocols, but BIS hasn't yet used these tools to achieve alignment. Are there certain authorizations that you don't have that prevent you from doing what you need to do, which we could work on here in Congress to help you?
Jeffrey Kessler
Well, I think we have the authority. I think that, you know, the administration is constantly attending to this, both myself in BIS and the administration as a whole, constantly attending to this issue of disparity between our export control regime and those of our partners and allies. And as I, as I mentioned previously, we're set on remedying those disparities.
Speaker 96
Well, I appreciate everything you do as, as someone who Iran just turned into a Lego figure last night. I think the, the influence of AI around the world is, can be good and it can be bad. And I certainly hope as we move forward, it's us that are in charge and not bad guys. So thank you for being here and Mr. Chairman, I yield back.
Madeleine Dean
Absolutely. I would love to see that Lego figure. Representative Dean, you're recognized.
Thank you, Chairman Mast and Ranking Member Meeks for holding this hearing. Thank you, Under Secretary Kessler, for being here and giving us updates and informing us today. Under Secretary, last year you testified that one of your top priorities was to bolster enforcement by adding staff. I wanted to follow up on that. Given the budget increase BIS got last year, what progress have you made in bolstering resources, staffing focused on enforcement?
Jeffrey Kessler
Well, this year we've hired, and I could get you the exact numbers after the hearing, but we've hired about 70 people, added about 70 people, and almost all of them are in enforcement. And we're going to continue to do that through the end of the fiscal year. We have already selected more candidates to add to enforcement. There should be about 60 more coming in the door by the end of the year.
Jeffrey Kessler
Yeah, and that, that includes the additional export control officers that I was discussing with other members. So on that front, we'll go from 12 to 25.
What, how many vacancies total?
Jeffrey Kessler
Well, we, we are aiming to onboard about 60 more people by the end of this fiscal year. And then of course, if the appropriation, if the budget request is approved, then we'll have, we'll have hundreds more in the following fiscal year.
Speaker 94
Yeah, the budget request is nearly doubled. So, yeah, okay. Under Secretary, I am worried that US-made technologies, including microchips, continue to be found in Russian military systems, deeply undermining our support for Ukraine and fighting back against Russia's illegal war of aggression. And I know many of my colleagues have raised these things. I'm troubled by the weakening of export controls in this administration.
As others have discussed, BIS has not added a single entity to the entity list since October of last year.
It's at its lowest level, if I'm reading the charts correctly, since 2008, no doubt eroding the efficacy of the list. Is staffing an issue there? Why have you not added others to the entity list?
Jeffrey Kessler
Well, I have a different perspective that enforcement of the list is critical.
Speaker 94
I did hear you say that, but let's talk about adding of entities. Of course I encourage enforcement. Let's talk specifically about adding entities.
Jeffrey Kessler
When we see a national security risk, we respond forcefully, whether it's through adding an entity to the list, we also have other tools available, including is-informed letters, including enforcement actions, and other authorities that other parts...
Are you concerned? Are you concerned when you see that gap, October till now? Are you concerned? Do you question your team and say, what's going on here? Why have we not added anything?
Jeffrey Kessler
That's not how I measure success. My perspective is that enforcement is extremely strong now, it's stronger than it ever has been, and that's the path that we need to continue on.
Jeffrey Kessler
Enforcement has gotten us stronger deterrence. It's gotten us, you know, an awareness within the business community that export controls aren't merely a cost of doing business. They're something that companies actually need to, actually need to plan around and change their behavior around. I think that...
Speaker 94
I get it, but why are these technologies still showing up in Russian military equipment?
Jeffrey Kessler
Well, I think that, first of all, I think that the penalties ought to be even higher, and, you know, that's partly something that we can achieve through a legislative fix.
Jeffrey Kessler
Sure, yeah, penalties across the board. Right, there's a statutory cap on penalties which we think should be higher. But, you know, the types of situations that you're referring to, this leads to enforcement actions, right? If we see that US technology is recovered on the battlefield of a country that shouldn't have those technologies, it leads to enforcement actions which can lead to penalties which can lead to deterrence.
Speaker 94
Let me dig down on the Russia piece specifically. How many staff at BIS are focused solely on enforcement with regard to Russia? I'm, you can imagine, like so many of us, totally engaged in Ukraine and why in God's name we have not been more effective in bringing peace to Ukraine and putting down this aggressive set of moves and war crimes by Mr. Putin. So how many staff are focused solely on enforcement with regard to Russia? The number, the number.
Jeffrey Kessler
We don't, we don't split up generally, we don't split up officials that way, like devote them to individual countries, but we do have dozens of, at least dozens of staff members who are focused on country group D5 countries and enforcement issues there.
Speaker 94
Well, I know my time is up and I thank you. We're all concerned that BIS is under-resourced, but I very much worry how are those resources being used and how are we really curtailing the malign things that are going on. So I thank you for your testimony. I yield back.
James Moylan
Representative Moylan, no. Okay, then we will go to Representative, we going to Miller or Burchett? Miller. Miller, you're up.
Thank you, Mr. Chairman.
You're welcome.
Max Miller
Take advantage of my opportunity. Thank you, Mr. Chairman, and thank you, Under Secretary Kessler, for taking the time to meet with us today. When we think about strategic competition with the People's Republic of China, most folks probably think about the Department of War, the CIA, or maybe even the State Department. But one extremely important and often overlooked agency on the front lines of this fight is the Bureau of Industry and Security, also known as BIS, at the Department of Commerce. What should make every American proud is the fact that the road to success for the CCP runs through the theft of American technology and talent, not their own.
It is for that reason that no other country on earth spends more time and money trying to steal our technology and trying to get the edge other than China. Fortunately, we have BIS to enforce our export controls to stop them. However, current statute is not without loopholes and workarounds that our enemies exploit. Under the Export Control Reform Act, the definition of foreign person is too narrow to include the US-incorporated affiliates of companies that are subject to export controls. Meaning that all an entity-list company must do to access sensitive technology is to establish a US affiliate company, which seems to be pretty easy to do.
I introduced the Adversaries Act to have the Office of Information and Communications Technology and Services evaluate this loophole and enhance BIS's ability to address this problem that we currently have. Under Secretary Kessler, once again, thank you for being here. I'm sure it's going to be, you know, a little bit longer, shouldn't be too much longer. Under your leadership, has BIS looked into this problem, and do you believe that an expansion of BIS authority to list US-incorporated entities affiliated with foreign adversarial companies on the entities list is necessary?
Jeffrey Kessler
Thanks for the question. I mean, I obviously we spend a lot of time on enforcement issues related to the entity list. As I mentioned, you know, one of the priorities has been to make licensing more effective as regards companies that are on the entity list, why we shouldn't be rubber-stamping license applications for exports to companies on the entity list. You know, in general, I support legislation that would expand Commerce's enforcement authority. And so I'm happy to take a look at the legislation that you mentioned and work with you on it.
Max Miller
Yeah, thank you very much. Michael from our team has been doing a fantastic job, and we will get it over to you and your team so we can hammer out the issues. But definitely something that we could work together and find a lot of common ground. That sounds great. Sounds great.
Thank you. And just can you give us some insight into how widespread, you know, really this problem is or that you're seeing? As I'm talking about it, do we have, you know, good visibility into instances where our adversaries are using this circumvention tactic right now?
Jeffrey Kessler
We know that there is a lot of circumventing and diversion that goes on all the time. We don't know the full extent of it, but we can guess based on our experience. Also just based on the caseload that our enforcement officers have. They have an enormous number of cases and leads per agent, which suggests that there's, you know, as I mentioned in my testimony, far more than their counterparts at peer enforcement agencies. And that suggests that there's unfortunately a lot of enforcement activity, sorry, a lot of violation that goes undetected.
And so that's part of the reason that we're asking for the budget increase for enforcement.
Henry Johnson
Yeah, no, I believe it is needed, and you guys are doing a phenomenal job, and thank you for, you know, making sure our country is safe. Thank you, Mr. Chairman, I yield back.
Thank you. Representative Johnson.
Henry Johnson
The Bureau of Industry and Security plays an important role in enforcing our nation's export controls, protecting our critical industries and securing our most sensitive technologies. Thank you, Mr. Chairman. Under Secretary Kessler, thank you for being here today. These issues have been among my key priorities during our tenure in Congress, and I'm very proud to have introduced the bipartisan Whistleblowers Aiding National Security Act, which would ensure that whistleblowers have a protected pathway to the State Department to report export control violations. I wanted to acknowledge Representative Keen and his shout-out to my bill while he was here during his time and to the importance of it.
Many members today have asked you about the importance of export controls and whistleblower protections. And I think through some of your prior testimony, you acknowledged that this is a very important tool that the federal government has.
Jeffrey Kessler
Yeah, thanks for the question. I mean as I mentioned in response to the other question, we have significant enforcement activity, leads, cases that are the product of whistleblower reports. So I think this is an important part of our enforcement practice.
Henry Johnson
Yes, and so Mr. Chairman, I hope that we can, I know this has passed through the committee, I would love to see it on the floor and get this thing through the finish line. Because I do think that whistleblowers play a critical role in our export control environment in particular. You've had a lot of questions from both sides of the aisle. There's a lot of concern here in the Congress over China having an unfair advantage in the AI race and making sure that we have US dominance in that space. And we, I hope you're hearing the concerns, sir, that this committee has about the lack of updating of our lists.
The lack, and your defense of that hasn't really answered anyone's questions about why new actors aren't being added to our monitoring lists. It's very concerning to us because Russia is consistently renaming companies, new companies are morphing into different entities, and there is a gap. And I hope that if rather than taking a very defensive posture on that topic, that you'll listen to the concerns of members of both sides of the aisle on this issue and you'll go back and take a good hard look at the practices that your agency has been engaging in to address this gap of our security, because it's something that this body, our members on this committee, are very, very concerned about. Another issue I wanted to talk about China for a second. In April, over 70 of my colleagues and I signed onto a letter led by Congresswoman Dingell opposing backdoor market access for Chinese automakers in the US.
The Biden administration's Department of Commerce implemented strict restrictions on these imports and yet this administration recently announced an exemption for at least one China-connected automaker. Since your bureau granted the exemption, the Chinese government released new standards requiring all new vehicles to support continuous monitoring data recording and remote management. So you granted an exemption for China to have an automaker in this country that after that exemption was granted, then China reformed its rules requiring continuous surveillance. I'm very, very concerned about that, sir. So how are you going to mitigate the concerns that a China-connected company that you granted an exemption to one day can be required by the Chinese government to fill software with spyware on our people?
Jeffrey Kessler
Well first of all, I want to clarify that the I think the rule that you're referring to, the Trump administration is the only administration that's implemented this rule. The prohibitions kick in in model year 2027, which is now. So, you know, we are the ones who are leading the implementation and enforcement of this rule. You're asking about a particular, we call them specific authorizations, a particular, it's a license essentially for companies to operate in the United States, continue to sell despite the prohibitions that are in place under this rule. But what I can tell you is that we ensure that there are very strong national security conditions in any license of that type.
Very robust conditions which would prevent the exfiltration of data to a foreign adversary. We ensure that the tech stack is clean and we put safeguards in place to make sure that that's the case.
Well sir, you would, I'm running out of time, but I just want to end with obviously it's very concerning that we would grant exemptions to Chinese companies in this country given their assault on our technological security and I think it's something that the administration needs to look at very closely and I'm out of time. I yield back.
Brian Mast
Mr. Kessler, you have the distinct honor of witnessing a new member here, Representative Gallagher, who just joined our committee. It is committee tradition that new members give us a fun fact about themselves.
John Gallagher
Thank you, Mr. Chairman. It's a pleasure to be joining the committee, and thank you for that opportunity. I think maybe the fun fact is I'm a sixth-generation Californian. So my family, you know, came to this great country, settled in California, and we like the place, so, you know, we stayed a while.
It's not really tradition, but thanks for giving us a fact.
What part of California is this?
John Gallagher
This is Northern California, just south of Yuba City, California, Mr. Chairman.
Max Miller... I'd love to have you sometime out.
Speaker 115
Look forward to joining. Max Miller could have warned you, but he chose also not to warn you that I mess with you.
Thank you, Mr. Chairman.
Speaker 113
You're recognized. You can ask all the questions you want right now. You get ten minutes. No, you get five. I'm just kidding.
John Gallagher
No, I am good. I've been listening very much to the conversation. I think very interesting conversation right there. California, actually our governor has done a lot of exemptions and benefits for Chinese companies. So I'm very glad to see some real enforcement from your department on that front and ensuring that we don't allow those types of things to happen.
So I congratulate you on that work. Obviously these are very important to us to ensure that we're not having, you know, China get smuggled technology. And so I appreciate your work and will continue to be monitoring that and working with you. Thank you.
Thank you.
Speaker 111
All right, we'll leave you alone. Representative Burchett, you ready, my friend? Number one in our hearts.
Tim Burchett
435 on the chart. Thank you, sir. Mr. Under Secretary, I'm going to ask you several questions, and as the 435th most powerful member of Congress, I usually go towards the end of most of these discussions, so everyone of my...
Speaker 110
We just went over this, Tim. He's number 435. He's new. He's number 435. You can't be 435 anymore.
Tim Burchett
You can't just step in and take my spot, Mr. Chairman. But what I... I reclaim my time. No, I hate it when people say that. That sounds so arrogant. But anyway, I want you to act like every one of my questions is one of the most brilliant questions you've ever heard since I'm sure you've already heard them multiple times.
And as Max Miller droned on about something, I wasn't really sure what he was paying attention to. He told me I don't pay attention very well, and I really not sorry, and he mumbled something about that. I wasn't really paying much attention when he told me that. Sir, how is the Bureau of Industry and Security planning to align its priorities with US national security interest?
Is your microphone on?
I'm sorry, is there what?
I couldn't hear you.
Oh. Is that better?
Yes, sir.
Jeffrey Kessler
Okay. Yeah, it starts with strong enforcement. You know, we have extensive rules that restrict the exports of goods and software and technology to foreign adversaries. And we need to enforce those rules. In the past that hasn't happened.
And that's why our budget request focuses on stronger enforcement, bigger enforcement, and making sure that we have an effective deterrent in place.
Tim Burchett
And it didn't pass over my publicly educated brain that my colleagues across the aisle, when they tend to forget that they were in power for four years and it was pretty much wide open. And now you're seeing the adults in the room and they're acting as if something that, you know, they got the rug jerked out from under them. I just find that kind of odd. I'm sure you do too. But increased export controls can lead to overregulation of American businesses while countries like China bypass the system.
I'm sorry, to combat what?
Speaker 99
Combat, um, let's, let me go back over it. Um, I'll just restate the question if that's all right. I reclaim my time. Increased export, I reclaim my time. Increased export controls can lead to overregulation of American businesses.
Jeffrey Kessler
I see. Yeah, no, I mean, of course we want to avoid overregulation, right? And as I mentioned in response to some of the other questions, more regulations don't equate to more safety. We need to be careful about that. Um, export controls, they carry serious penalties.
Uh, we want companies to invest in compliance, but because of that, we need to be careful when we impose new requirements that they're, we're not, you know, we're not forcing companies to overinvest in something that doesn't have a national security dividend.
Speaker 99
Okay. Why, why is the Bureau of Industry and Security licensing process so time-consuming?
Jeffrey Kessler
Well, for the vast majority of licenses, the process is fast and efficient. Right? As I mentioned in response to some of the other questions, the average processing time in 2025 is about the same as in 2024, and that's 60 days. Uh, for many types of licenses that, uh, for, for different reasons can be approved more quickly, they are, sometimes in a matter of weeks. Uh, the licenses that we apply more scrutiny to, there's a reason.
Um, the licenses that involve sensitive technologies, that involve entity-listed companies, um, that involve sensitive regions of the world, those are the ones that we are very careful with. And I think again, I think that that's the appropriate way to handle those kinds of licenses because we don't want rubber-stamping.
Speaker 99
Do y'all have a plan to ex, expedite any of that that you're having, that you have delays with?
Jeffrey Kessler
The, the goal is to make all licenses go through the system as quickly as possible, but we don't want to compromise national security. We want to expedite all of it. Right?
Speaker 103
Yeah, I think sometimes we, uh, tend to throw the baby out with the bathwater on that, and I, I agree with you on that. Mr. Chairman, I yield back my 36 seconds.
Speaker 101
This is the end of the hearing. I mean, do you want to close it out, Mr. Burchett? Do you want to sing a little song?
Maybe a little song.
If that's what you like. If I know it, I'll join you.
Speaker 102
That's okay. I'm not, this is, I'm a semi-professional, uh, singer, as you know, and this is not a union setting, so I'd be violating my rights.
No, no.
Okay. All right. Fair enough. Thanks so much, though.
You're welcome. Another day.
Brian Mast
Under Secretary Kessler, thank you for joining us today. I see no more individuals requesting to ask you questions. Uh, thank you for your valuable testimony. I thank members for their questions. Members of the committee may have some additional questions, uh, for you, Under Secretary.
We will ask that you respond to those in writing, and this committee stands adjourned.