On Monday, U.S. Trade Representative Katherine Tai called out China’s “lack of adherence to global trading norms” and vowed that the United States would respond by developing trade policies that protect U.S. markets against unfair economic practices and benefit American workers. The speech is one of the clearest examples thus far of the Biden administration’s intent to compete with China by countering its anti-competitive economic methods, which have flouted free-market rules, distorted the global market and involved wholesale theft of American technology and know-how.
Tai made it clear that economic tools like tariffs and export controls are central to the administration’s approach. Yet the government agency most critical to these efforts still lacks the resources and authorities it needs to accomplish its mission.
We’re talking about the Department of Commerce. As America’s national security becomes intertwined with its economic strength and technological leadership, Commerce has an increasingly central role in protecting U.S. technology advantages, addressing supply chain vulnerabilities and ensuring long-term economic competitiveness.
The Commerce Department’s role and responsibilities have grown in size and complexity, while its capabilities and resources have not. This shift reflects the nature of the competition with China (and one of the reasons the analogy to a “new Cold War” is flawed): Economic security and advantages in non-military technology have outsize importance compared to traditional military strength. That’s still crucial, of course, but much of the day-to-day contest happens in the arena of commerce. Just as other departments, like Treasury and Homeland Security, have been revamped and restructured as their relevance to national security grew, the Biden administration needs to reform the Commerce Department’s resources, structure and authorities if its China strategy is to succeed.
In 2018, the Trump administration declared that economic security is national security. This proclamation articulated a shift that had been in motion for years: The once arcane enforcement of trade and security laws was now the tip of the spear in addressing the China challenge.
The Biden administration, like its predecessor, characterizes China as more than a military threat. While the Defense Department prepares for conflict with China, other parts of the U.S. government are focusing on curbing China’s economic and technological strength, bolstering America’s might in these areas and countering a Chinese economic model that is at odds with free-market principles.
The importance—and neglect—of the Commerce Department is illustrated by a relatively obscure office called the Bureau of Industry and Security (BIS). As the enforcer of export controls, this agency has become ground zero of the technology competition with China. Geoeconomic tools such as export controls, investment reviews, and technology trade restrictions are now key levers in national security strategy. Yet the office has suffered from a lack of strategic direction and insufficient resources.
In 2018, Congress passed the Export Control Reform Act, which aimed to restrict the export of certain technologies with both civilian and military uses. The law directed BIS to develop a list of “emerging and foundational” technologies that would be candidates for protection under new export controls. Three years later, however, these lists are not yet finalized, due in part to inadequate coordination between BIS and other agencies. A report by the U.S.-China Economic and Security Review Commmission found that Commerce had “failed to carry out its responsibilities.” Critics fear that further delays could worsen national security risks by hindering the work of the Committee on Foreign Investment in the United States, which screens transactions involving foreign investment. The situation bodes poorly for the much more complex and expansive data collection and analysis efforts that will be required if the department is to execute its expanded mission.
For example, Commerce has the lead role in investigating the supply chain for semiconductors—advanced computer chips that are essential for most modern technological devices and a key front in the U.S.-China tech competition. In response to a major shortage of semiconductors, President Joe Biden signed an executive order calling for a comprehensive review of America’s critical supply chains. Commerce was tasked with analyzing risk at each stage of the semiconductor supply chain—design, manufacturing, assembly—and is the point of contact for industry leaders to raise supply chain-related concerns.
While the department put forward sensible recommendations in its 100-day supply chain review report, policymakers should be concerned about whether it can continue to do such analysis at speed and scale continuously over a range of sectors and industries. To do this, Commerce will need a comprehensive understanding of foreign and domestic industrial and technological trends, which in turn requires access to information the department lacks right now. Then, making sense of the information will also require resources it does not have: people with the knowledge to analyze the data as well as technical solutions, such as AI-enabled methods for extracting information and integrating disparate data.
One important source of information that the Commerce Department isn’t equipped to gather at scale is detailed industry surveys. These surveys are used to collect information not available from other sources—financial, production, research and development, and export control data—and thus are essential for better insight into the economic security of the United States, its allies and partners and its adversaries. The Commerce Department has the authority to conduct these, but only does so sporadically because it lacks the resources. The inability to make full use of these powers results in under-informed national security decision-making, an avoidable handicap.
As the scale and urgency of the China competition dawned on policymakers in the White House and Congress, their expectations for the Commerce Department evolved dramatically and quickly. Today, the agency needs revamping in three primary buckets: resources (money and personnel), structure and authorities.
While the department has received a steady increase in funding over the past several years, the White House and lawmakers can do more to boost its resources to match its expanding mission. One important reform is to use the defense budget to fund certain Commerce programs in which the military has a direct stake, such as export controls on military technologies. This would not be unprecedented: In the past, Congress has used the defense budget to fund nuclear programs in the Department of Energy and infrastructure security work under the Cybersecurity and Infrastructure Security Agency (part of the Department of Homeland Security).
Congress could also play a role in solving the staffing problems at Commerce by creating new incentives for talent recruitment. It could establish special hiring authorities to streamline cumbersome processes and offer incentive pay for skilled talent—something Congress has done in the past, such as for the Homeland Security and Defense departments, to signal that a particular priority or issue area needs to get more attention and resources.
Commerce also needs structural and organizational reform, particularly within BIS. BIS focuses almost entirely on export controls, but could take on a broader set of nontraditional threats if Congress gave it the power to do so. In 2004 as the war on terror ramped up, the Treasury Department created the Office of Terrorism and Financial Intelligence, where the department consolidated all of its authorities around anti-money laundering and illicit and terrorist finance. Reorganizing BIS in a similar fashion would allow Commerce to centralize its authorities on export controls, supply chain security and other national security risks that aren’t military in nature.
The Commerce Department should do more to take advantage of the wide range of open-source intelligence. Myriad open-source reports are produced daily by the private sector, NGOs, foreign government agencies; national security analysts increasingly recognize the value of this information for policymakers to better understand technology developments, research trends and industrial capacity. Commerce could set up an information fusion center to integrate all of the open-source intelligence accessed and used by different offices within the department, to ensure this intelligence is accessible and used in a timely and effective fashion.
Finally, Congress should designate the Commerce Department as a member of the intelligence community. Last year, the Space Force’s intelligence arm became the 18th member of the intelligence community. Other less traditional members include the Treasury and Energy departments. As a member agency, the Commerce Department could create an intelligence analysis office that would not only support internal missions that require national security information, but also provide policymakers across the government with Commerce’s analysis on economic and technology issues.
The U.S.-China competition poses a complex and evolving challenge. The Commerce Department will play a vital role in developing and implementing a winning strategy, but its ability to fulfill this role will depend on its resources and authorities.
Throughout modern U.S. history, the government has created, funded, adapted and restructured departments whose mission fit with the threat the country was facing, but whose capabilities fell short of that mission. After the 9/11 attacks, Congress created the Department of Homeland Security to address the terrorism threat. The National Security Act of 1947 was a response to the emerging competition with the Soviet Union, prompting the creation of the Department of Defense and establishing key national security entities including the CIA, the National Security Council and the Joint Chiefs of Staff. Righting the ship at the Commerce Department won’t be as dramatic and far-reaching, yet the impact may prove as profound.