BIS Update Conference Takeaways: Expect “Dramatic Increase” in Export Controls Enforcement Against U.S. Adversaries
Client Alert | March 26, 2025
Gibson Dunn lawyers stand ready to assist clients in navigating through these changes and uncertainty. We will continue to closely monitor BIS’s actions in 2025 to assess the evolution of U.S. export control policy and enforcement.
The Bureau of Industry and Security (BIS) held its annual Update Conference on Export Controls and Policy from Tuesday, March 18 to Thursday, March 20, 2025, in Washington, D.C. This year’s conference was notable in that it was the first time Commerce Secretary Howard Lutnick has spoken at length about export controls and export enforcement. His remarks, and those of other BIS personnel at the conference, hit two recurring themes: (1) a ramp-up in BIS enforcement; and (2) a heightened focus on China.
A. Enforcement Ramp-Up
Secretary Lutnick set a firm tone in his opening remarks by declaring that BIS was on the “intellectual frontline” of an era of “reemerging great power conflict.” He indicated that the new administration would take an aggressive approach to those who sought to profit by selling sensitive technologies to U.S. adversaries and would seek “a dramatic increase” in enforcement and fines for those it identifies as having violated the Export Administration Regulations (EAR). BIS enforcement leadership in subsequent panels emphasized that they are prioritizing investigations related to quantum computing, artificial intelligence (AI), hypersonics, and semiconductors as well as military and intelligence end uses and users.
Officials classified the acquisition of these technologies and related goods by China and Iran as significant threats to the United States and described them as top enforcement priorities. BIS leaders echoed Secretary Lutnick’s emphasis on China and promised to use export enforcement to support the administration’s “maximum pressure“ campaign on Iran, prioritizing cooperation with the Department of Justice to prosecute diversions destined for Iran.
In addition to China and Iran, BIS officials noted that Russia remains an enforcement focus, specifically highlighting diversion networks based in Hong Kong and China that have funneled controlled items to Russia for use on Ukraine battlefields. One BIS enforcement official said that “BIS is working at 100 miles an hour” to counter Russia. At the same time, representatives from BIS—as well as from the Departments of State, Defense, and Treasury—made little mention of concrete plans to enforce against Russia-related export control violators in 2025, perhaps due to the uncertainty around ongoing, U.S.-mediated peace talks between Russia and Ukraine.
BIS officials also explained how export enforcement could be used to support the administration’s policy priorities, such as stopping the flow of fentanyl into the United States. Indeed, BIS staff noted that the enormous harm inflicted by fentanyl could potentially justify its eventual designation as a controlled chemical weapon.
BIS staff also highlighted that they were deploying new tools for enforcing export controls. For example, since July 2024, BIS has begun adding addresses with high diversion risk to the Entity List and has listed additional red flags to address the diversion of advanced technology goods. And, for the first time, all foreign parties to BIS license applications are now vetted against intelligence data, allowing a more robust review of transaction parties. Finally, officials stressed the continued importance of multilateral enforcement efforts, a message which was echoed by conference attendees and panelists representing partner governments including the EU, Japan, South Korea, the UK, Canada, Australia, and New Zealand.
B. Focus on China as a Priority for Regulation and Enforcement
China featured prominently at the conference. In the opening plenary, Secretary Lutnick cited the recent success of China’s artificial intelligence model, DeepSeek, as evidence of China’s continued efforts to evade U.S. export controls and use U.S.-made chips to power its AI technology. He also raised concerns about the growing influence of Chinese capital, noting a substantial Chinese presence at both ends—and along the span—of the Panama Canal.
Secretary Lutnick signaled an escalation in export enforcement as part of the U.S. response to the perceived threat from China. Though the Biden administration already oversaw aggressive enforcement of export controls against China—as highlighted by a record-setting fine for alleged violations of the Huawei foreign direct product rule—Lutnick called for a concerted effort to fight against the possibility of what he described as “a controlled communist future.” He urged industry to be “eyes and ears for BIS” in detecting and disrupting export control violations.
In subsequent panels, BIS officials noted China’s sharp increase in military spending directed toward the People’s Liberation Army (PLA), warning of China’s publicly stated goal of achieving military modernization by 2027. These military investments extend beyond traditional armaments to encompass intelligent warfare, AI, quantum computing, and other advanced tech—reaching every level of war to facilitate rapid mobilization. Officials also pointed to China’s broader strategy of “military-civil fusion,” a state-driven initiative that integrates military and civilian capabilities, significantly bolstering the development of a self-reliant defense industry.
In connection with China’s military modernization efforts, BIS officials pointed to China’s ongoing diversion activities aimed at advancing its own defense capabilities while contributing to the industrial base of China-friendly states such as Russia. Officials flagged that China continues to leverage Hong Kong as a convenient diversion hub to route controlled items through shell companies to destinations including Russia, Iran, and North Korea. Officials indicated that addressing diversion risks remains a priority, with continued efforts underway.
Conclusion
Secretary Lutnick and many BIS and other U.S. agency officials have now heralded a new era of aggressive, extraterritorial export enforcement to achieve U.S. national security objectives. China was once again the headliner adversary at the conference, with much of the conference focused on the myriad threats to U.S. critical technology leadership posed by China-related diversion efforts. How BIS’s expanded and assertive approach to export controls and enforcement will be implemented, however, remains an open question. Gibson Dunn lawyers stand ready to assist clients in navigating through these changes and uncertainty. We will continue to closely monitor BIS’s actions in 2025 to assess the evolution of U.S. export control policy and enforcement.
Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these issues. For additional information about how we may assist you, please contact the Gibson Dunn lawyer with whom you usually work, the authors, or the following leaders and members of the firm’s Sanctions & Export Enforcement and International Trade Advisory & Enforcement practice groups:
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