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.
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Boak reported from West Palm Beach, Florida.
Credit: AP
Credit: AP