Commerce AI Diffusion Export Rule: House China Committee Reacts

Here it comes. With just days left in the Biden administration, Secretary of Commerce Gina Raimondo is understood to be on the verge of dropping a finalized Export Control Framework for AI Diffusion after a rushed interagency process.

“It is our understanding that the Bureau of Industry and Security (BIS) is close to publishing a new ‘Export Control Framework for AI Diffusion’ that would create a global licensing regime for the export of advanced GPUs and the model weights of closed-weight dual-use AI models,” noted the bipartisan House Permanent Select Committee on China. 

Commerce is trying to prevent China from acquiring leading US technology via loopholes like third-party sales, but done wrong, the rules could stymy US business and boost China’s sales.

There’s genuine concern about the “unprecedented scope and complexity of this potential regulation, which was developed without industry input and could significantly undercut US leadership and competitiveness in semiconductor technology and advanced AI systems.”

Ken Glueck at Oracle calls the framework “wildly overbroad” and points out: “what Congress accomplished by passing the CHIPS Act (a mere $280 billion) the Biden Administration takes away with the Diffusion Framework, because in one IFR it has managed to shrink the global chip market for US firms by 80 percent and hand it to the Chinese.”

President-elect Donald J. Trump has already indicated he’d repeal Biden’s AI rules. 

The House Permanent Select Committee on China weighed in on January 6 with a letter supporting the concept of export controls but raising smart questions about the impact of restricting sales by US technology companies. 

As Chair Rep. Moolenaar and Ranking Member Rep. Krishnamurthi noted: “We do agree that demand for US AI technology is an opportunity to pry both companies and countries out of Beijing’s orbit. From trade to technology policy, we have a serious once-in-a-generation moment to leverage US AI technology to push countries towards the United States and away from the PRC, while also ensuring that the most sophisticated AI models continue to be trained in the United States. We should take it.”

Trump’s team at Commerce needs to heed the warning and keep the way clear for American business to crush China.

Read more about the strategic choices for the global AI marketplace here.