BIS OK’d About 80% of Applications Involving Entity Listed Chinese Companies, Data Shows

The Bureau of Industry and Security approved $23 billion worth of prospective exports involving Chinese companies on the Entity List from January through March 2022, representing about 79% of all license applications it received for those companies during that time period. The data, recently released by House Foreign Relations Committee Chair Michael McCaul, R-Texas, shows an “unacceptable” amount of approvals, the lawmaker said.

“This critical U.S. technology is going to the Chinese Communist Party’s surveillance and military efforts,” McCaul said. “BIS must and can do more.”

Between Jan. 3, 2022, to March 31, 2022, BIS approved 192 of the 242 license applications it received, denying 19 and returning 31 without action. Of the approvals, about 115 applications involved controlled technologies and about 77 involved exports classified under the Export Administration Regulations as EAR99 -- low-level technologies or items that don’t usually pose national security concerns.

In total, the agency received license applications during that three-month period for nearly $30 billion worth of exports, approving about $23 billion, rejecting about $5 billion and returning about $955 million without action (RWA). RWAs occur when the applicant asks to withdraw its application, when a license exception applies to the shipment or when the items aren’t controlled by the Commerce Department. They also occur when the application is missing documents or when the applicant can’t be reached to answer questions.

BIS said the data “by itself” is not “sufficient to draw accurate conclusions about the effectiveness of BIS’s licensing policy” toward China. Because of the agency’s “clear” license review policies, exporters “generally” apply for licenses only when they expect to be approved, which naturally skews the data toward a lower denial rate, the agency said. BIS also said the exports “primarily” involved EAR99 shipments.

“Every license reflected in this data” was “carefully reviewed pursuant to the relevant policy and approved after an interagency process that included the Departments of Defense, State, Energy, and Commerce,” BIS said.

The agency also noted the total value of the licenses may be misleading. BIS “generally” issues licenses that are valid for four years, and exporters are required to “submit good faith estimates of the quantity and value of the items” they plan to export over that time period. As a result, the “value of approved licenses does not correspond to exports” made over the time period of the data, BIS said.

BIS has previously objected to McCaul’s characterization of the agency’s licensing data. The lawmaker in 2021 released statistics that showed BIS approved more than a combined $100 billion worth of export licenses for shipments to Huawei and Chinese top chipmaker SMIC from Nov. 9, 2020, through April 20, 2021 (see 2110210073). BIS at the time warned that those numbers didn’t present an accurate picture of licensing approvals and risked misleading industry on the implications.