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  • US effort to curb China’s and Russia’s access to advanced computer chips ‘inadequate,’ report finds

    US effort to curb China’s and Russia’s access to advanced computer chips ‘inadequate,’ report finds

    WASHINGTON — The Commerce Department’s efforts to curb China’s and Russia’s access to American-made advanced computer chips have been “inadequate” and will need more funding to stymie their ability to manufacture advanced weapons, according to a report published Wednesday by the Senate’s Permanent Subcommittee on Investigations.

    The Biden administration imposed export controls to limit the ability of China and Russia ability to access U.S.-made chips after Russia’s invasion of Ukraine nearly three years ago.

    The agency’s Bureau of Industry and Security, according to the report, does not have the resources to enforce export controls and has been too reliant on U.S. chip makers voluntarily complying with the rules.

    But the push for bolstering Commerce’s export control enforcement comes as the incoming Trump administration says it is looking to dramatically reduce the size and scope of federal government. President-elect Donald Trump has tapped entrepreneurs Elon Musk and Vivek Ramaswamy to lead a new “Department of Government Efficiency” to dismantle parts of the federal government.

    The Trump transition team did not immediately respond to a request for comment on the report.

    BIS’s budget, about $191 million, has remained essentially flat since 2010 when adjusted for inflation.

    “While BIS’ budget has been stagnant for a decade, the bureau works diligently around the clock to meet its mission and safeguard U.S. national security,” Commerce Department spokesperson Charlie Andrews said in a statement in response to the report.

    Andrews added that with “necessary resources from Congress” the agency would be “better equipped to address the challenges that come with our evolving national security environment.”

    In a letter to Commerce Secretary Gina Raimondo on Wednesday, Democratic Sen. Richard Blumenthal of Connecticut, chair of the subcommittee, pointed to an audit of Texas Instruments that showed the Russian military continued to acquire components from Texas Instruments through front companies in Hong Kong to illustrate how the export controls are failing as an effective tool.

    The committee’s findings, Blumenthal said, suggest that Texas Instruments “missed clear warning signs” that three companies in its distribution chain had been diverting products to Russia. Texas Instruments did not immediately respond to a request for comment.

    “While Congress must provide BIS more resources to undertake its critical mission, it is long past time for BIS to make full use of the enforcement powers Congress has conferred upon it and take aggressive steps to cut the flow of U.S. semiconductors into the Russian war machine,” Blumenthal wrote.

    It’s not just Texas Instruments that’s the issue. The subcommittee in September published a report that found aggregated exports from four major U.S. advanced chip manufacturers nearly doubled from 2021 to 2022 to Armenia and Georgia.

    Both of those countries are home to front companies known to assist Russia in acquiring advanced chips made in the U.S. despite export controls.

    China, meanwhile, has created “vast, barely disguised smuggling networks which enable it to continue to harness U.S. technology,” the subcommittee report asserts.

    Washington has been gradually expanding the number of companies affected by such export controls in China, as President Joe Biden’s administration has encouraged an expansion of investments in and manufacturing of chips in the U.S.

    But Chinese companies have found ways to evade export controls in part because of a lack of China subject matter experts and Chinese speakers assigned to Commerce’s export control enforcement.

    The agency’s current budget limits the number of international end-use checks, or physical verification overseas of distributors or companies receiving American-made chips that are the supposed end users of products. Currently, Commerce has only 11 export control officers spread around the globe to conduct such checks.

    The committee made several recommendations in its report, including Congress allocating more money for hiring additional personnel to enforce export controls, imposing larger fines on companies that violate controls and requiring periodic reviews of advanced chip companies’ export control plans by outside entities.

    ___

    Boak reported from West Palm Beach, Florida.

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  • Athletes Could Earn 51% Of Revenue, Curb “Booster” Role, Use Neutral Arbiter For NIL

    Athletes Could Earn 51% Of Revenue, Curb “Booster” Role, Use Neutral Arbiter For NIL

    A day after UNLV quarterback Matthew Sluka announced he is no longer playing for the Rebels after “misrepresentations” over NIL payments, the attorneys in the House v NCAA legal action released their revised settlement proposal Thursday evening, attempting to assuage Judge Claudia Wilken’s concerns around the term “boosters” in regulating perceptions surrounding athlete “pay for play” overtures.

    According to the newly filed brief, the “Injunctive Relief Settlement will result in a foundational transformation to college sports, which will empower and benefit college athletes like never before”, the both sides’ attorneys wrote. “In a sea change to the NCAA’s longstanding and long-defended rules, Division I college athletes will now be eligible to receive benefits collectively approximating 51% of future athletic revenues—comparable to professional sports.”

    What may be more impactful is how the plaintiffs attempt to narrow the parameters around the word “booster”. The term “booster” has had an outsized influence on the NCAA for decades, and Judge Wilken was upfront with her concern that both sides had to get a better handle on characterizing what is admittedly a very nebulous term if the case had a chance to receive her blessing.

    The attorneys response addressed it this way: “Defendants’ enforcement authority over third-party NIL deals will no longer extend to all third parties (as it did under the Interim NIL Rules) or the broadly defined term “boosters” (as it did under the prior Settlement Agreement presented to the Court). Rather, it will be limited to a narrower group of entities and individuals closely affiliated with the schools (“Associated Entities or Individuals”) to prevent circumvention of the settlement. And, for the first time, any limitations on payments will be subject to neutral arbitration review so that the NCAA cannot act as judge, jury, and prosecutor.”

    Neutral arbitration would be a sea change for college athletics. A neutral arbitrator would be able to decide “quickly” whether the proposed NIL transaction between an athlete and an “Associated Entity or Individual” meets the Court’s narrower definition.

    Both sides also agree that “existing prohibitions on faux NIL payments” be guided by “clarifying rules that provide cleared and more objective guidance” whether the payments are permissible.

    The brief explains engaging an arbitrator will “make sure that the NCAA’s enforcement authority with respect to these third-party payments will no longer be unchecked”. While the headlines may highlight the fact that brief estimates athletes could be earning 51% of future athletic revenues (similar to some professional leagues with collective bargaining), the fact that athletes will no longer be subjected to an organization that has acted as judge, jury and executioner could be bigger news.

    “Those arbitrations will occur quickly, and importantly, no penalties can be imposed while arbitration is pending unless the arbitrator determines that good cause has been shown. And if the arbitrator sides with enforcement, then the student-athlete can terminate the NIL agreement at issue to avoid risking eligibility. This process is narrower, fairer, and more administrable than what exists today,” the brief concluded.

    This filing provides resolution from both sides one side to Judge Wilken’s queries earlier this month, but it is important to see how the attorneys are structurally building the guardrails around unlimited pay for play. Left unanswered are questions surrounding who would pay the arbiters, how would they be available to thousands of athletes at any given moment, and if there would be an appeals process.

    This is article has been updated to reflect that both sides agreed to submit this brief. More information available here.

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