A new rule unveiled by the Biden administration focuses on securing U.S. dominance in artificial intelligence deployment and innovation by enabling the interchange of sensitive AI technologies with partner nations and enacting further safeguards to prevent access from adversarial countries.
Announced on Monday, the directive imposed by the Department of Commerce’s Bureau of Industry and Security places new export controls on components of AI softwares and technologies. The specific elements targeted by the rule include advanced GPU computing chips and select, closed AI mode weights.
Commerce Secretary Gina Raimondo told reporters on Sunday that the mandate focuses on safeguarding advanced AI systems from adversarial use while still benefitting allied nations.
“Our goal in putting out this rule is to build a trusted technology ecosystem around the world, which will also allow us to diffuse our technology while also safeguarding our national security and the risks associated with AI,” she said.
The changes made to Commerce’s licensing requirements work to thread the needle between continued commercial trade while mitigating the national security risk accompanying the proliferation of superconducting chips. Some exceptions exist for supply chain operations, except to arms-embargoed countries.
The rule also includes new license updates to Commerce’s existing Data Center Validated End User authorization.
The VEU program enables domestic exporters to send certain high-technology items to entities in countries like China and India that have met certain interagency review requirements.
Regarding the Data Center VEU program, the new directive designates two separate types of data centers: universal VEUs and national VEUs. The former provides entities in the U.S. and select allied and partner countries with the ability to build out a data center without additional permissions. The latter category allows entities headquartered outside of arms-embargoed countries to construct data centers in specified locations with no additional authorizations.
The diffusion of semiconductor chips falls into similar crosshairs. Raimondo confirmed that supply chain operations like packaging and testing are explicitly excluded in the new rule, but that new controls for advanced computing chips will require new authorizations for exports, reexports and transfers.
“We’re trying to focus on national security,” Raimondo said.
AI model weights — the mathematical operations that influence an outcome of a given AI model — are also subject to new export controls. The controls will explicitly apply to models trained with 10^26 computational operations. These models will require approvals for export and transfer to certain countries.
The rule also creates a new foreign direct product rule applying to impact weights produced abroad using chips made with U.S. technology or equipment. This only applies to closed-weight model controls.
“Open weight models are not covered by the controls, so the open source ecosystem can continue to advance, and the threshold for closed weight model controls will move up automatically as the frontier moves,” Raimondo said. “So this is very hard, and no rule is perfect.”
As the final detail to the rule, the BIS will impose security conditions to safeguard the storage of highly advanced models in destinations to protect U.S. security and reduce the risk of diversion for advanced chips.
Raimondo clarified that the focus here is on the largest compute clusters as well as the most advanced AI models.
“This rule builds on previous regulations that aim to protect U.S. national security by restricting the ability of countries of concern to access the most advanced U.S. semiconductor and AI technologies that can be used for national security purposes,” U.S. National Security Advisor Jake Sullivan said on the call.
A senior administration official confirmed that Australia, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, Republic of Korea, Spain, Sweden, Taiwan, the United Kingdom and the United States will not be subject to new restrictions on AI chip and frontier model exports.
Embargoed countries include Afghanistan, Belarus, Burma, Cambodia, Central African Republic, the People’s Republic of China — including Hong Kong and Macau — Democratic Republic of Congo, Cuba, Eritrea, Haiti, Iran, Iraq, North Korea, Lebanon, Libya, Nicaragua, Russia, Somalia, South Sudan, Syria, Venezuela and Zimbabwe.
Private sector stakeholders have already expressed concern regarding the new trade restrictions. In a blog post shared with Nextgov/FCWNVIDIA called the rule “misguided.”
“In its last days in office, the Biden Administration seeks to undermine America’s leadership
with a 200+ page regulatory morass, drafted in secret and without proper legislative review,” NVIDIA Vice President of Government Affairs Ned Finkle wrote in the blog post. “By attempting to rig market outcomes and stifle competition — the lifeblood of innovation — the Biden Administration’s new rule threatens to squander America’s hard-won technological advantage.”
A senior administration official said that for lower volume orders for chips, which would be under 1,700 processing units, the new rule offers clarification that can expedite licenses and purchases.
“I think what this is going to do is, at the lower end, it’s going to remove the licensing requirements. We’ll have notification requirements that will help us ensure we’re not allowing those to kind of get into smuggling channels to China or other countries of concern,” the official said. “So we actually think this is going to make things move faster for a lot of countries under consideration.”
The rule has a 120-day comment period before going into effect, and a one-year compliance period.
Given the imminent inauguration for incoming President Donald Trump this month, Raimondo confirmed that she expects changes to be made to the rule following feedback from the comment period.
“We hope that the next administration takes full advantage of those 120 days to listen to experts, industry, industry players, partner countries, consider their input, and I fully expect the next administration may make changes as a result of that input,” she said.
