Jeff (00:13)
Hello again, this is Jeff Rittner. Today is March 20th and I am publishing the third and final part of this special episode of Rittner Reflections. Welcome back. I am excited to have Julie Witt, Jose Vega and Robert Kearsley with me together as we wrap up our conversation on this last day of the Bureau of Industries annual update conference on expert controls and policy in Washington DC.

During this last session, we will gather insights into the remaining sessions and get a final readout and analysis from these amazing experts. So welcome back, Julie, Jose, and Robert. Thank you for taking some time out of your hectic schedule this morning to meet with me. I know that some of you are leaving to catch a flight and others need to get checked out of your hotel shortly. So let's go ahead and get going.

Julie Whitt (00:51)
Hi.

Jeff (01:06)
Last night BIS held the big reception so any one of you how was it?

Jose Vega (01:15)
I'll go first. So we stopped by to begin with at the beginning, but unfortunately we weren't able to stay the entire time. We had a previous engagement. And so the time that was there, it was a lot of networking. And unfortunately, in the time that I was there, I wasn't able to catch anybody from BIS at the reception. I figured that's where the roundtables were coming in handy today.

You know, just not working for me for that reception. But I'd like to hear what Robert and Julie thought about it.

Robert Kearsley (01:45)
And I just ducked in for just a minute just to see what was going on. mean, it seemed to be pretty well attended. And there were, at least what I saw, quite a few BIS folks around. But unfortunately, I didn't do much networking nor getting a chance to talk to the BIS folks as I would do today.

Julie Whitt (02:03)
I was there the whole time. It was a lot of networking. They basically had the same type of food choices. So you had different bars that you could go to as far as buffets. And then there was a lot of BIS officials there. A lot of the enforcement officers were lurking around there.

But yeah, basically it was a good space for networking for the most part.

Jeff (02:30)
Great, great. Yeah, it normally is. And the food sometimes can be good. Sometimes it's okay. anyway, well, I'm glad you guys got to go to that. Today, I think I heard there were breakout sessions or roundtables. What happened today? What was kind of the highlights of today?

Robert Kearsley (02:49)
Yeah, they have go ahead. I'm sorry. Good. So, right. They had the typical round tables where various agencies were there to answer questions as as normally has for update. And then they had workshops and this morning was preventing technology diversion was 1 of the workshops and the other 1 was China regulatory questions.

Julie Whitt (02:49)
Yeah. No, go ahead. Go ahead, Robert.

Robert Kearsley (03:12)
And then this afternoon, it's going to be Russia regulatory questions. And then there's another preventing technology diversion. Actually, later this morning, or right now, actually.

Julie Whitt (03:20)
Yeah. Yeah, they had 29 tables there, you know, addressing various different topics, everything from meet the deputy of the assistant secretary all the way down to the Office of Information and Community Technology and Services that was there. And of course addressing China and Hong Kong, Baltics, Europe, the Middle East, space controls, military items, chemical and bio,

biological weapons and of course the SME, the semiconductor manufacturing equipment tables. So in my experience, I went and sat at the semiconductor equipment table and also sat at the foreign direct product rules. And the reason why I sat at those tables is because Sharon Cook was there and

She had mentioned in her session on semiconductor controls that they had taken down a lot of the information, guidance information related to de minimis and flow chart for determining if something was subject to the EAR.

So I'm glad I went to that table because she was actually handing out hard copies of the revisions that haven't been published yet. So I got those hard copies, which I'm pretty excited about so I can go back and share them. So I got those hard copies of what I guess is supposed to be released on the website soon.

Jeff (04:44)
Good.

Julie Whitt (04:52)
And then I also had a chance to sit with Carlos Monroy over at the semiconductor and manufacturing equipment table. I sat with him for about an hour and really it gave me the opportunity to explain how these regulations came out so rapidly and how the flowdowns are impacting industry and how it's making it very difficult for us to

strategize not only internally, but according to some of our customer requests through the flow downs and protocols that our customers are setting up. So they took that information and were very receptive and you know, we're grateful that, you know, we voiced those concerns. It was myself and several others at the table. There were some Sidley attorneys and

some people from the defense industry and automotive industry. So we all had the opportunity to share our experiences with the fluidity and the rapidness of these rules being released the way that they were. I think that, individually, I'm gonna schedule a meeting to meet with Carlos and

and some of the other regulators to address, you know, certain questions that were raised at the table and talk about the advanced IC designers list and things like that. But overall, I think it was a great session.

Jeff (06:19)
That's great, Julie. Yeah, I just, recall last year when I was attending in this large room, they had, think, Robert, you said 12 tables, maybe that these huge round tables and everybody, a government official will be sitting at a table and then you guys all decide which one you sit down. And as you described, Julie, you have an opportunity to hear what they have to say, but also to communicate your points and your concerns or maybe questions that you have, you have that real time. So that's probably a real highlight of this conference is having that.

Julie Whitt (06:34)
Mm-hmm.

Yeah.

Jeff (06:48)
interaction with the government officials. that's fantastic. So Jose, were you able to sit at a table? And if so, which one did you dine at?

Jose Vega (06:56)
Yeah, I said two. One was called the sanctions bureau of industry and security, is, even the folks there kind of laughed about the title because, you know, BIS doesn't do sanctions, right? That's a fact. But it more just general, you know, compliance licensing questions, actually. That was the topic there. The one I was actually excited about was the AES automated export system table because there were actually folks from census there.

which is just great. If you guys deal with AES, highly recommend it. You got to go and geek out at the nitty-gritty detail in certain scenarios. I was actually, from our perspective, we have certain scenarios that don't necessarily fit exactly with the filing system. So that was a great opportunity for me to pose those scenarios to them and provide that input and that guidance.

Julie Whitt (07:26)
yeah, that's great.

Thank

Jose Vega (07:55)
which is, again, I was really excited, as well as some of the kind of future state things that we're planning on doing. So I was able to get guidance on that as well. And I did pose a question about a comment that was brought up, I believe it was in the end-user breakout session yesterday, where they were kicking around the idea of adding the subparagraphs to the AS filing. So that's a major change. As you guys may know,

Currently, the AS system only accepts the first five alphanumeric characters of an ECCN, right? So you can't go down to the subparagraph level, which makes it gives us that burden when we're shipping or exporting any of the .z items. So currently, the requirement is that if you're shipping one of those, so as an example, 58992.z, z as in zero.

Julie Whitt (08:32)
Mm-hmm.

Mm-hmm.

Jose Vega (08:44)
you have to add that dot z at the beginning of the description because AES doesn't accept that subparagraph, right? So they're kicking around the idea of kind of adding the subparagraphs to AES. And, you know, I brought that up in the table and they just kind of smile because they understand how big of a change that would be to AES. The AES does do little bit of validation on, well, does do validation on ECCM to destination, right? So.

Certain ECCNs cannot be shipped to certain destinations, and the system will tell you. So if you're going down to the subparagraph, there's ECCNs that have tons of paragraphs, 3B001 is an example, and they all could potentially have different levels of control. So just that spider web, just picture the spider web of the logic that they would need to program into AES. Yeah, I find that interesting. So yeah, I got to geek out in AES. That's just an area that...

you know, I know a lot about, so I was excited about that.

Jeff (09:39)
That's great, Jose. Robert, you mentioned earlier about China. think, did you attend the China session?

Robert Kearsley (09:45)
Yeah, I did a couple reasons. One, obviously, was the semiconductor community. This is big China, all the China rules that have come out. it was well attended. I there was probably I was surprised everybody in the roundtable because I would say there was several hundred people. They put it in the ballroom. It was that well received. That's how many people are interested in it. Biz had Gabriella Carney, Miranda Sieg.

Charles Wall and Chris Chamberlain on the panel. And the first part of the first hour, nearly the first hour, was mostly background on

policy, talking about China's military modernization and their diversion tactics. Then it talked more about the regulatory framework of the various China rules that have come out, talked about Part 744 and those various rules. Talked, of course, some of the regulations around the chips and semiconductor manufacturing, the Foundry due diligence rule, red flags and restrictive parties. Now,

The Q &A was the most interesting part, nearly an hour and there were many, many questions asked, but I did see a common theme among the questions and the theme was around due diligence. Companies wanting to know how do we identify these boundaries? How do we identify good business partners? How do we know military uses and end users? so some of the questions were, for example, business registration is blocked. We can't access to see who

companies are to identify who they are, what their business is, and so forth. Unfortunately, the BIS reps didn't necessarily have a good answer. They just said, well, use public websites, use public sources of information like we do for certain things, which sometimes you can get the information you need, even if you can't get the registration information. There was a question around how do we confirm military end users? What's the litmus test for that?

and someone gave an example of a military hospital. And unfortunately, again, BIS kind of punted and said, you know, that's a good question. Yes, it's a challenge to identify those. Again, use public sources, use your instincts to understand the market and the place it's going and the people and the entity and so forth. And then there was a question around

Entity list, what about if it's not a listed entity, it's a non-listed entity, but they're owned or partially owned by a listed entity. What do we do about that? Again, Bia said, well, you just need to make sure that it doesn't go to the listed entity. Of course, it's not prohibitive to go to a non-listed entity, if there's unlike the OFAS.

rules about ownership necessarily, but you have to just do your due diligence, whatever that is, to make sure that it's not going to elicit entity. Another tidbit was that they said, and those of you out there that are dealing with export license for China right now, it wasn't a question, but they did comment on whether or not there are any delays or holds on licenses right now.

said we can't comment, which a non-comment, take that as it were, could mean a comment of yes, there's delays, but they said with the new administration or at least the, you know, the up-race-along of BIS in place, they expect those to move more

now.

And another tidbit was

a little on the side, they said, if your company is experiencing, say, China's not approving an export from China to the US, for example, BIS does want to hear about it in terms of any blocked sales from China to the US. They do want to hear about that.

And they are working on an FAQ for the outsource IC Semigrante or assembly and test companies, OSAT. So there is an FAQ in the works. And yeah, that was about it.

Jeff (13:36)
Well, that was very informative, Robert. I think what you discussed is probably very relevant to many people listening here today. So thank you for sharing that. As we kind of wrap up our time here, I can imagine at this point, each one of you are probably mentally exhausted. That's a lot of information thrown at you over a very short time. I just remember that's how I felt. as you prepare,

Julie Whitt (13:59)
Yeah.

Jeff (14:00)
As you prepare to depart, I'm kind of interested maybe just in your overall assessment. You think about the days you've been there. What did you like? What would you have liked to see or hear differently that you didn't hear? And then would you come back? Would you come into one of these again? Or was this a one and done? So why don't we start with you, Jose?

Jose Vega (14:21)
Yeah, for me, being the first time attendee, I enjoyed it, just the overall experience. I'll definitely come back. But however, I do feel that some of the content that was provided and material were a little on the basic side, right? Kind of like EAR 101. And I think that just some of the gaps even in the agenda with regards to keynote speakers and things like that.

I think it could have been, everybody could have been better served if it was postponed to a later date. And I get it as a matter of timing, Certain officials haven't been confirmed or sworn in, know, changes from any priorities from the administration may not have been, you know, message down to the different agencies and they're, know, in a holding pattern until they get that, those directions. So I think it would have been better to kind of hold it a little bit later.

But you know, the IS to be fair to be as you know, they're probably a tough spot, right? With the all the changes to the federal government It's possible that you know, there was no certainty that it could have been held later in the year, right? So it's possible that was like we're gonna do it now and do the best we can Or we may not get a chance to do it later on but you know, but definitely more to come back to you know get

what I would think is a standard BIS update because the kind of some of the input from attendees, attendees that, know, it's usually there's more, there's an actual more of an update, update as opposed to just going over existing regs and existing requirements.

Jeff (16:07)
Okay, good, very good input. Julie, how about you?

Julie Whitt (16:10)
Yeah, I pretty much share Jose's same sentiments. think it may have been, you know, better executed had it been postponed. But I'm thankful and grateful for, you know, for the fact that they still held the event. I guess the negatives were the gaps in the agenda and not sticking to the agenda and things of that nature. But yeah, I'll always come back for regulatory updates.

Jeff (16:37)
Yep, good. And you too, Robert, you've been 20 times, so you're going to make it 21? Yeah.

Robert Kearsley (16:42)
I know I punch card. When do I get a free one?

You know, I have to say, I'll speak on the positive side of having Secretary Lutnick, think was very good, always strong messaging coming from the top, right? And his messaging and the other, I'll say politicos and the other industry, not industry reps, but government reps, it was a very common theme. seemed like emerging technologies is a big deal. It's with us, we already have regulations, we don't know what's next in that arena. But the theme that seemed very consistent throughout that that

was a constant in China, everything to China, another big constant through the conference. One little.

mechanical thing or I don't know what you call it that was very good I thought was the question the way the questions are done now it's on an app and when you're in the session you put the question in the app and then it's submitted electronically so no more standing up and you know the kind of the disruptor things with that or filling out a card and then then going through it it's all comes out one of the one of the BIS people will look at all the questions and they begin to you know the

Jeff (17:38)
Yeah.

Robert Kearsley (17:51)
they begin to answer them and I thought that was a very good format.

Jeff (17:54)
Yeah.

Right. That's good. That's very good. Well, finally, just one last thing here. I'm going to ask each of you, so I'll you a second. I'll answer the question first, so I'll give you a second to think. But I'm going to ask you each to give me one word that describes your experience or your takeaways from attending this conference. And I'll just give you a chance to think. I'll just start by saying, as I've listened to you now for three days,

The word that jumps out at me is uncertainty. And it sounds like there wasn't a lot of, you didn't leave with a lot of certainty that you came with. to me, that's the word I'm thinking of. But I'll go ahead and let you guys, Julie, it sounds like you had that word. Do you have another word or is that your word? Okay, sorry. Yeah, yeah, okay. That's your word. Okay, how about you, Robert?

Julie Whitt (18:28)
That's exactly what I was going to say, yeah.

Yeah, that was my word. That was my word. Uncertainty. Yeah.

Robert Kearsley (18:51)
Again, I'm not going to pick a new one. I could get the thesaurus out and try to find another variation of that, but I think going in it, that was right. But I think that was the concern going in. Right. Yeah. No, thanks. You summed it. You did.

Jeff (18:59)
That was yours as well. I hit the nail on the head. Yeah. Okay.

Jose, do you got anything different or are you on the same?

Jose Vega (19:08)
I know,

like you said, you hit the nail on the head, but I think from my perspective, something else I could use to probably be experienced at this point, right? So I've gone through my first one. I know what it's supposed to be like to look for. And so I'm just hoping that for future times I make my way over here, there'll be additional material input, just additional experiences, things like that. But yeah, I think you hit

You got it right to begin with.

Jeff (19:36)
Okay, well good. Well, that's it. It's a wrap. I would like to, before we just sign off here, I just want to say to each one of you, Jose, Julie, Robert, thank you so much. I know it took time out of your experience and you're, you know, to come sit and meet with me and talk, but I do appreciate that you did this. And I also appreciate just the great insights and information sharing that you provided. And I think our listeners found this super useful. And so I wanted to say thank you and I wish you all very safe journey home.

Hopefully there's no delays and we'll talk again sometime soon, I'm sure. So thank you.

Julie Whitt (20:10)
Thank you, Jeff, for having me.

Jose Vega (20:11)
the

Robert Kearsley (20:12)
Thank you.

Jeff (20:12)
Yes,

yes, thank you. All right, take care, bye bye.

Julie Whitt (20:13)
You

Jeff (20:16)
Well, there you have it. That concludes my special edition of Written Reflections, where we had an opportunity to hear from these three experts. I hope you enjoyed. was fantastic information, and I really appreciate each one joining

Jeff (20:32)
Okay, just to wrap up here, let me share with you a few of my takeaways. Obviously, as you heard earlier, the idea of uncertainty resonated with everyone. But I did also pick up some other good things. I I sense that everyone had a good opportunity to connect with other practitioners, others that are struggling with some of the same regulations and concepts. I did also hear there was not a lot of new information.

It seemed like the US government was a little hesitant to share things and maybe that because again, they're kind of waiting for better directions. So not a lot of new information. There was opportunity, it sounded like to meet with a lot of the new government individuals and so on. that sounded like that was a positive. There also to me, I sense there was a focus a lot on the emerging technologies like quantum, like AI and so on, semiconductors and so on. And then there was just

focus on the countries. We heard Japan, we heard Korea, we heard Russia, we heard China. So lot of focus on that. And of course, also making sure that people understood the end users and who they're actually doing business with. So all in all, think it sounded very positive. I appreciated the perspective. I think you can all expect a very busy and active few years under this new administration. So with that, I would like to sign off to say thank you so much for joining. We will talk again very soon.

Keith Belmar II (21:59)
You have been listening to Rittener Reflections. Thank you for tuning into our three-day episode of live coverage here at BIS Update in Washington, DC. Subscribe and stay tuned for our next episode coming soon.