Now that particular tale has a happy ending: The American citizen did the right thing and reported the suspicious contact, and the FBI, working together with our armed forces, took it from there. I wish I could say that all such incidents ended that way.
Work with Huawei, or us, but not both – US Government
In May alone, we arrested both Qing Wang, a former researcher with the Cleveland Clinic who worked on molecular medicine and the genetics of cardiovascular disease, and Simon Saw-Teong Ang, a University of Arkansas scientist doing research for NASA. Both of these guys were allegedly committing fraud by concealing their participation in Chinese talent recruitment programs while accepting millions of dollars in American federal grant funding.
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The Communications EO outlines several ways in which it may be implemented through rules and regulations, including but not limited to (i) identifying persons owned/controlled by foreign adversaries, (ii) identifying technologies or countries with respect to which transactions warrant particular scrutiny, (iii) establishing procedures to license transactions otherwise prohibited, and (iv) identifying a mechanism and relevant factors for negotiation of agreements that may mitigate concerns identified in the Communications EO. The Secretary of Commerce is required to publish rules or regulations implementing the Communications EO within 150 days of its issuance (i.e., by October 12, 2019). It is expected that, once implemented, the Communications EO will bar Huawei products from being used in US communications infrastructure and networks.
In 2019 CFIUS forced the divestiture of Chinese interests from PatientsLikeMe (patient-network and research platform in which people with similar diseases connect online) and Grindr (gay dating app which collected geolocation and HIV status). In 2020 Beijing Shiji Information Technology was required to divest its interest in StayNTouch, Inc. a U.S. company providing mobile technology and property-management systems for hotels.
I am the President of Coughlin Associates and a storage analyst and consultant. I have over 37 years in the data storage industry with multiple engineering and management positions. I have many publications and six patents to my credit. I am also the author of Digital Storage in Consumer Electronics: The Essential Guide, the second edition was published by Springer. Coughlin Associates provides market and technology analysis (including reports on several digital storage technologies and applications and a newsletter) as well as Data Storage Technical Consulting services. I publish a Digital Storage in Consumer Electronics Report, a Media and Entertainment Storage Report, and an Emerging Memory Report. I am active with SMPTE, SNIA, the IEEE and other professional organizations. I am the founder and organizer of the Annual Storage Visions Conference (www.storagevisions.com), as well as the Creative Storage Conference (www.creativestorage.org). I was general chair of the Flash Memory Summit for 10 years. I am also a Fellow of the IEEE and a member of the Consultants Network of Silicon Valley (CNSV). For more information about me and my publications, go to www.tomcoughlin.com.
Much of my research work is in conjunction with Forbes Insights and Unisphere Research/ Information Today, Inc., covering topics such as artificial intelligence, cloud computing, digital transformation, and big data analytics.
The immediate reaction in the media was that U.S. companies can now sell their products to Huawei, channeling the wishes of many U.S. businesses. A couple of days later, Reuters reported that "In an email to enforcement staff on [July 1] that was seen by Reuters, John Sonderman, Deputy Director of the Office of Export Enforcement, in the Commerce Department's Bureau of Industry and Security (BIS), sought to clarify how agents should approach license requests by firms seeking approval to sell to Huawei. All such applications should be considered on merit and flagged with language noting that 'This party is on the Entity List. Evaluate the associated license review policy under part 744,' he wrote, citing regulations that include the Entity List and the 'presumption of denial' licensing policy that is applied to blacklisted companies."2 Tellingly, the official statement from the Chinese government following the G20 Summit failed to mention the Chinese telecommunications manufacturer.3
Effective May 16, 2019, the Department of Commerce added Huawei and its 68 entities to the Entity List.6 The Entity List designation was based on the determination that Huawei and its affiliates have been involved in activities contrary to the national security or foreign policy interests of the United States. The primary example cited was the 13-count indictment against Huawei, accusing Huawei of knowingly or willfully entering transactions with the government of Iran without obtaining a license from the Office of Foreign Assets Control (OFAC) in violation of U.S. sanctions law.
Some initial media reports interpreted the first category to narrowly concern telecom network and equipment only, which was in line with a statement by Secretary Ross.9 Guidance received from the BIS office that issued the Temporary General License suggests that the terms of the Temporary General License was written broadly with the intent to capture any network that could be described by the language of the license.
After the end of the Cold War, export controls became a somewhat niche topic within U.S. national security policy, focused principally on regulating sales of military items and restricting the spread of weapons of mass destruction. Controls on dual-use technologies, those that can be used for both military and commercial purposes, sought to balance the national security benefit of restricting sales with the parallel goal of enabling high-technology companies to maintain revenue streams from exports that supported their development of next-generation technologies.
While the CSET study was focused on the recent procurement of AI chips, the U.S. government has been expressing concern for years that China is too often succeeding in evading export controls on a much broader range of technologies. BIS has some flexibility to change its approach to regulation in order to make enforcement easier and more effective, as it did with the October 7 regulatory changes, but only Congress can appropriate additional resources for export license application review and export control enforcement.
Even some of the legal data that is available gives cause for concern, suggesting that Russia is diverting its trade through other third-party countries that continue to do business with both Russia and the West. This includes falsely labeling shipments as non-controlled goods and buying finished goods that contain controlled microelectronics and stripping those goods for parts. For export control enforcement organizations, such activities are difficult to track at the required speed and scale.
The October 7, 2022, package of export controls against China is too new for comparable data to be available at the time of this writing, but the same caution applies: published government data does not necessarily tell the whole story, which must focus on both licit and illicit transactions.
However, the primary goals of U.S. companies are generally legal compliance and maximizing profits, not determining and advancing U.S. national security interests beyond what is stated in law and policy. Thus, if the Entity List does a poor job keeping pace with the creation of new Chinese and Russian export control evasion networks, then the considerable private sector resources devoted to corporate compliance will sometimes have only a limited effect on U.S. national security. The degree to which this is the case depends upon the nature of the industry (more consolidated industries are easier to track and control than highly fragmented ones) and on the nature of the goods (large, expensive, and durable items that require significant post-sale servicing are generally easier to track than industries that rely on large-volume sales of inexpensive items).
A second component to leveraging these AI systems is to integrate these open-source data sets with government-restricted ones in a modern data analytics and AI platform. Several government agencies already have technology for the combination of private and open-source data into one database that is updated in real time or near real time. These capabilities can facilitate the rapid identification of supply chain connections to Chinese military end users by reconciling disparate data sources, such as addresses and mutual proximity of specific entities, as well as the specific geolocation of cargo ships, including those that have turned off location-identifying capabilities. 2ff7e9595c
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