Strengthening Export Control Enforcement

US-China Technology CompetitionHouse Foreign Affairs South and Central Asia Subcommittee · 2026-02-24 · 119th Congress
The Subcommittee on South and Central Asia held this hearing to examine how the Bureau of Industry and Security (BIS) enforces U.S. Begins at 0:35:58
Transcript
Highlights

Title

Enforcing export controls against Chinese AI chip smuggling

Purpose

The Subcommittee on South and Central Asia held this hearing to examine how the Bureau of Industry and Security (BIS) enforces U.S. export control laws against smuggling of advanced AI chips and technology to China, and to explore legislative options to strengthen that enforcement. Assistant Secretary of Commerce David Peters, who oversees BIS export enforcement, testified on penalties, budget, personnel, and specific investigations, while members raised legislation including the Chip Security Act, the ECRA Penalties Increase Act, the Stop Shells Act, and the BIS Strength Act. Begins at0:35:58

Who spoke

Chairman (Rep. Heisinga)0:35:58: Opened the hearing citing reports that DeepSeek trained its latest AI model on smuggled Nvidia Blackwell chips0:36:23, noted Huawei smuggled TSMC components for 1.5 million advanced AI chip equivalents in 20240:37:35, and touted his Chip Security Act and the House-passed 77% BIS budget increase versus the Senate's 23%0:38:55.

Ranking Member Kloger Dove (D-CA)0:41:09: Said BIS has only 11 export control officers worldwide0:41:34, criticized the administration for gutting the international policy office and industry coordination0:43:44, and cited her letter to the Commerce Inspector General over a possible conflict of interest involving G42 and Trump's crypto company0:45:200:45:45.

Assistant Secretary David Peters, BIS Export Enforcement0:47:42: Cited a $95 million Cadence Design Systems settlement and a $252 million Applied Materials settlement, the second-largest standalone BIS penalty ever0:48:520:49:22; said BIS collected roughly $278 million in penalties against about $191 million in funding0:49:52; proposed raising the maximum civil penalty and extending ECRA's statute of limitations from 5 to 10 years0:51:020:51:32.

Rep. Self (R-TX)0:52:18: Discussed his ECRA Penalties Increase Act, which would raise penalties to four times the transaction value and $1.2 million base0:52:59; questioned Peters on the affiliates rule and his Stop Shells Act0:55:14.

Rep. Kloger Dove (second round)0:57:45: Asked how many Blackwell and H200 chips have been sold to G42 and Chinese end users, with Peters saying "so far none" H200s to Chinese users0:58:000:58:22; pressed Peters to commit to restarting technical training and the annual update conference1:00:341:02:33.

Delegate Mouland (Guam)1:03:29: Referenced the China AI Power Report Act and the conviction of former Google engineer Leong Ding for stealing AI trade secrets1:04:20; asked about the Disruptive Technology Strike Force and BIS's IT modernization funding1:06:201:07:37.

Rep. Shre (R-IN)1:08:50: Discussed his BIS Strength Act with Ranking Member Kloger Dove to hire outside experts1:09:50; asked how export control officers are trained on complex rules1:10:12 and about Iranian UAV component smuggling1:12:42.

Rep. Kaine (D-NJ)1:14:44: Cited a CNAS report estimating 10,000 to several hundred thousand AI chips smuggled into China in 20241:15:23; questioned Peters on Operation Gatekeeper and the foundry due diligence rule targeting TSMC/Huawei front companies1:17:431:18:13.

Chairman (second round)1:20:00: Noted America will produce upwards of 10 million AI chips this year sold worldwide with only 11 export control officers to monitor them1:22:17; had Peters confirm chip smuggling is "going on" and a top enforcement priority1:21:21.

Rep. Maria Elvira Salazar (R-FL)1:25:38: Revealed a Miami tax collector found OFAC/BIS general licenses allowing Ferraris, Rolls-Royces, jet skis, and golf carts to be exported to Cuba1:26:371:27:09; pressed Peters to commit to investigating and revoking non-humanitarian licenses and identified Under Secretary Jeffrey Kesler as the official with license authority1:30:50.

Rep. Ramo (D-RI)1:31:15: Said BIS loosened controls in January to allow China to buy H200 chips with six times the processing power of previously restricted chips1:31:51; raised concerns about a $2 billion UAE crypto deal tied to Steve Witkoff's son and a $500 million UAE stake in a Trump family crypto company following AI chip approvals to the UAE1:32:43; asked whether political staff review export licenses1:33:08.

Chairman (third round)1:36:42: Cited a China Select Committee finding that Nvidia engineers in China work closely with DeepSeek and access its data centers, asking whether this risks violating General Prohibition 101:37:10; asked about PRC roadblocks to end-use checks, including waits stretching over a year1:39:331:40:00.

Key moments

Peters testified BIS reached a $95 million settlement with Cadence Design Systems and a record-tying $252 million settlement with Applied Materials, the statutory maximum and second-largest standalone BIS penalty ever0:48:520:49:22.

Peters said BIS collected about $278 million in penalties and restitution against roughly $191 million in funding, arguing "the American people get far more out of BIS than they put in"0:49:52.

Peters proposed raising the ECRA civil penalty cap to four times the transaction value (from twice) and extending the statute of limitations from 5 to 10 years0:51:020:53:59.

Rep. Kloger Dove asked how many H200 chips had been sold to Chinese end users; Peters replied "so far none"0:58:22.

Rep. Salazar disclosed that a Miami tax collector found OFAC/BIS licenses permitting export of Ferraris, jet skis, and golf carts to Cuba, and pressed Peters, who said he was "not personally aware," to commit to revoking non-humanitarian licenses1:26:371:28:08.

Rep. Ramo said BIS loosened controls in January to allow China to purchase H200 chips with six times the processing power of prior restricted chips, and linked UAE AI chip approvals to a $2 billion crypto deal involving Steve Witkoff's son and a $500 million UAE stake in a Trump family crypto venture1:31:511:32:43.

The Chairman noted only 11 U.S. export control officers oversee roughly 10 million AI chips America will produce and sell worldwide this year1:22:17.

Peters confirmed chip smuggling to China is actively occurring and "among our top enforcement priorities"1:21:21.

Kaine referenced a December 8, 2025 press release on "Operation Gatekeeper," a Southern District of Texas case involving arrests for smuggling hundreds of millions of dollars in AI chips and GPUs1:17:43.

The Chairman asked whether Nvidia engineers embedded in China working with DeepSeek could be at risk under General Prohibition 10 of the Export Administration Regulations; Peters declined to address potential ongoing investigations1:37:101:38:10.

Metadata

CommitteeHouse Foreign Affairs South and Central Asia Subcommittee
Chamber / CongressHouse · 119th Congress
Date2026-02-24
TypeHearing
Witnesses
The Honorable David Peters — Assistant Secretary of Commerce for Export Enforcement, Bureau of Industry and Security, U.S. Department of Commerce
Videoyoutube
Transcript213 caption blocks · 10,661 words · 1:43:37 runtime
EventCongress.gov 118974