Executive Summary: Aligning Export Controls with National Security Priorities
Rescinding the AI Diffusion rule provides a significant opportunity to strengthen U.S. leadership in the global AI infrastructure market while protecting national security. As other nations around the world develop their own AI capabilities, the strategic imperative is to ensure that U.S. companies, rather than competitors like China, capture the expanding global market for AI services and infrastructure.
The proposed regulations replace traditional individual licensing requirements with a streamlined two-tiered system based on “Know Your Customer” (KYC) principles and trusted vendor programs. This would allow vetted U.S. companies to rapidly deploy AI technology globally while maintaining robust oversight through real-time reporting and dashboard monitoring systems.
This proposed framework emphasizes transparency and accountability over bureaucratic licensing processes and draws on successful precedents from export controls for encryption and weapons of mass destruction. Trusted vendors would receive expedited treatment for exports outside denial countries. Exporters would provide continuous monitoring data to the Bureau of Industry and Security (BIS) through digital dashboards that would track GPU deployments, their security status, and end-user/end use compliance.
The proposed new rule would significantly tighten restrictions on China and other adversarial nations through expanded bans on AI technology exports, enhanced foreign-direct product rules, and the prohibition of exports of U.S. data center services in denied countries. The new framework would extend controls beyond GPUs to include chipmaking technologies, lower-capacity chips that could be aggregated for AI training, and cloud computing services. This dual approach aims to deny adversaries access to critical AI capabilities while ensuring American companies can compete effectively in allied and partner markets, thereby maintaining influence over AI governance and international security standards and securing U.S. technological leadership in the global digital economy of the 21st century.