Mitt Romney Discusses Concerns On The Potential Threats From Adversaries Stealing US Technology

7 months ago

During a Senate Homeland Security Committee hearing on Wednesday, Sen. Mitt Romney (R-UT) questioned witnesses on the risk from foreign adversaries stealing US intelligence from exports.

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Transcript

00:00 Senator Scott, I'm going to ask some questions now and then when the chair

00:05 returns she'll I think provide Senator Lankford the opportunity to speak and

00:09 then we'll finally get to Senator Blumenthal. A couple of questions. There's

00:15 a great deal being written about the degree of leakage, if you will, of things

00:19 that are not supposed to be exported from our country or from our friends

00:22 that are somehow getting in the hands of adversaries of one kind or another. How

00:27 great a problem do you think that is? I mean, how much, how many, I mean, is this

00:32 is this a tiny share of those things that are most sensitive or is this a

00:38 pretty significant problem that that we need to address? And any one of you

00:42 can respond to that. Maybe I'll go over to Mr. Mancuso, which is, is this, and I

00:47 realize we got a lot of things in the list and so some things they're not

00:50 terribly interested in, but I'm thinking particularly about large-scale chips

00:54 that go into AI or other key defense technologies. How much of that is

01:00 getting through, do we think? Is this, are we a sieve? Are we, you know, not really a

01:05 sieve but drip, drip, drip? What's kind of the characterization of what's

01:09 getting around our export controls? Thank you for that question. I can say

01:14 this, as the Assistant Director for Global Trade, I think the sheer volume of

01:19 legitimate trade far outweighs the illicit trade that's going on. However,

01:23 that small slice is of concern. So what you have is you have folks at this table,

01:29 all the 20 partners at the E2C2, the intelligence community, all of us are

01:33 completely laser focused on retaining America's innovation, our creativity, our

01:39 intellectual property right. We develop the most advanced weapon systems in the

01:42 world. Because of our ability to create this, we are the envy of the entire world.

01:48 That also means our adversaries will stop at nothing to obtain this

01:52 technology in these weapon systems. So with that being said, we are focused on

01:57 this issue. We are an investigative agency looking at these agencies,

02:01 attempting to disrupt and dismantle the flow of this technology. And it concerns

02:06 all of us. Like I said, we're focused. I'm also concerned the day that they don't

02:11 want our technology. The day that we don't, we aren't the world leader. Because

02:16 that means that they've surpassed us and they become superior. And all of us at

02:21 this table are laser focused, making sure that day never happens. Yeah, I think

02:25 there's a recognition that with regards to AI in particular, it's very difficult

02:28 to control the software. Some software and AI has already been put on open

02:33 source and represents in my view a huge breach of poor judgment or breach of

02:41 good judgment. And it is poor judgment. And there are some who believe that the

02:44 only way we're going to try and keep AI from being used in a most negative way

02:49 is if we limit the supply of the chips necessary to operate out AI. Are we able

02:55 to do that successfully or is it like no, we really can't? Mr.

02:59 Curlin, do you have a sense of that? So at BIS, Senator, you know, we have been

03:03 imposing controls not only on entities that are involved in these types of

03:08 diversionary attempts, but you know, we have over the past year and a half

03:11 rolled out a series of significant countrywide controls on China in

03:19 addition to parties and not only that are resident there, but there are actors

03:24 that are sitting in third countries as well. It is a complex problem set and

03:29 certainly with regards to the semiconductor ecosystem where the vast

03:33 majority of chips are that are produced offshore, trying to, you know, identify

03:39 potential violators is something that we all here are working hard to do. Using

03:44 all-source intelligence, putting together analytical cells that are trying to

03:50 identify those activities, working hand-in-hand with industry to both

03:55 prevent on the front side and then if there are violations to have penalties

04:01 that are high enough to deter others is critical. We've been doing that as an

04:05 interagency. We've issued over a dozen multi-sealed documents just in the past

04:11 year and a half that's trying to get at this problem set is how do we get

04:15 industry to harden their supply chains and their distribution networks and then

04:19 we're working globally, internationally. Chair Hassan mentioned, you know, some of

04:25 the complications of our international partners. In most of these jurisdictions

04:30 the licensing folks are actually disconnected from the enforcement folks,

04:34 right, and that creates a bit of a gap because the enforcement folks don't know

04:39 what's coming into the system that's being licensed and the licensing folks

04:41 don't actually know what's going out, which is the biggest vulnerability, the

04:44 things that should be coming into the system that aren't. And so we've been

04:47 working very closely. We have attaches similar to HSI that are stationed now in

04:53 ten countries around the globe trying to get our international partners to

04:59 increase their capacity to identify and then take enforcement action in

05:05 coordination with us. It's a challenge but we're using all the tools at our

05:08 disposal, industry, interagency, international, to try to get at making

05:14 sure that these key technologies aren't getting into those hands and where we

05:17 identified it we're either using criminal enforcement, administrative

05:20 enforcement, or as I mentioned just this morning, you know, we added four companies

05:24 to our entity list in China that were explicitly diverting AI chips to the

05:30 Chinese military weapons program so that we can alert industry and have them

05:35 harden their supply chains when they're doing their due diligence of transactions.

05:39 And what will the penalties be for those corporations that have been, if

05:43 you will, shipping those those chips into into China? Sure, so they would be

05:48 subject to criminal and/or administrative enforcement authority. So

05:53 20 years, up to 20 years in jail or a million dollars per fine. And then on the

05:58 administrative side, we have a statutory maximum of three hundred sixty

06:02 five thousand dollars or twice the value of each violation. And as in the case of

06:07 Seagate, you know, that resulted in a three hundred million dollar penalty to

06:11 set a deterrence level to say, you know, we expect companies to put in place

06:15 internal compliance programs where they're screening their transactions and

06:19 then when they find a problem to come to us voluntarily through what we call a

06:22 voluntary self-disclosure to tell us. Because if they don't do it and there's

06:26 a willful action or there's knowledge, then we're going to take aggressive

06:30 action to try to deter others from from shortchanging and also putting those

06:35 that are investing in compliance programs at a competitive disadvantage.

06:39 So we want to level that playing field at the same time. Miss Choi, who's been

06:43 the most successful in being able to get the key technologies that are vital and

06:48 and we have endeavored to restrict. Is it China or is it Russia? We read stories

06:56 about Russia being able to get technologies that they're using in

06:58 Ukraine. The same time we read about China just today, we've read more stories

07:03 about China taking getting advantage of our technologies. Are they equally

07:09 effective or is is one more effective than the other?

07:14 Senator Romney, I would say that I would refer you to the IC's annual threat

07:18 assessment which focuses on China's efforts in particular. I would say both

07:22 of those countries pose concerns but with regard to China that threat

07:26 assessment notes that China seeks to become a world science and technology

07:29 superpower and to use this technological superiority for political or sorry

07:33 economic political and military gain and among its various methods to do that it

07:38 includes means to acquire or steal IP, its cyber operations and its illicit

07:44 procurement. So I would say China is laser focused on trying to advance its

07:48 science technology program and it's a focus for us at the Department of

07:51 Justice. Thank you. Senator Lankford.

07:55 Senator Romney, thank you.

Mitt Romney Discusses Concerns On The Potential Threats From Adversaries Stealing US Technology

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