In October, the Senate passed its version of the National Defense Authorization Act (NDAA). A bipartisan annual bill to authorize and promulgate Defense Spending.
The Senate version of the bill includes a measure offered by Sens. Jim Banks, R-Ind., and Elizabeth Warren, D-Mass., originally offered as a stand-alone bill called Guaranteeing Access and Innovation for National Artificial Intelligence Act (GAIN AI).
This act would impose additional restrictions on the export of US-made AI semiconductors.
GAIN AI isn't in the House version of the NDAA and has no House sponsors.
The administration opposes GAIN AI.
Notable supporters, according to The Wall Street Journal, include Microsoft and Google who would enjoy unnecessary access to more AI chips than they could ever hope to use.
This is corporate welfare, draped in an appeal to national security.
Fortunately, GAIN AI will have to survive congressional conferencing the competing NDAA proposals into one coherent bill — an effort already underway.
The NDAA Conference Committee should reject the Senate GAIN AI language and accede to the House in this matter.
GAIN AI is the codification of certain controls on the export of sensitive semiconductor technology to certain countries including China and Russia.
The goal was to prevent these countries from acquiring the skills to develop advanced AIchips and to reserve production for US needs.
The Biden Administration’s "AI Diffusion Rule" was the previous culmination of these efforts. Biden's rule, an executive order, required: U.S. AI chip makers to reserve 50% of all of all production for domestic consumption.
It put severe limitations on the exporting of the remaining chips to so-called "Tier 1" allies and a few others. And it completely banned AI chip exports to China, among others.
Biden's AI Diffusion Rule went into effect a week before President Trump was sworn into office in 2025. One of Trump’s first acts of office was to rescind the Biden Rule as "ill conceived."
The Biden Rule might be dead but its ghost lives on, through GAIN AI. GAIN AI is an ineffective years-old solution to a present-day non-existent problem.
For example, several years ago as the AI Diffusion Rule percolated through the White House and the effects of the COVID-19 pandemic wreaked temporary havoc on global supply chains, it assumed worldwide demand for the U.S. chips would vastly outstrip domestic production.
Under such a scenario, reserving 50% of U.S. AI chip production would seem to make sense.
But that’s not the case today. U.S. chip manufacturers are showing no such supply shortages and there is more than sufficient manufacturing capacity for all buyers.
Nobody in this country is waiting in a line to purchase Nvidia's AI chips.
Moreover, at the time, it was assumed China wouldn’t be able to develop advanced AI chips on its own or develop a homegrown industry to feed its own market.
But the opposite is true: Surprisingly, China is not only meeting all of its own domestic needs but will soon have excess capacity for export.
The Chinese chips are currently inferior to US-made chips but more than good enough to export.
What GAIN AI does is depress demand for U.S. chips, while incentivizing China to spare no expense to boost production.
Simply put, if we limit sales to China’s preferred customers, we guarantee the global south will be running on Huawei chips rather than Nvidia's.
Crippling U.S. companies doesn’t make the U.S. any safer. Indeed, in the long run, it may crimp our ability to compete with China.
In fact, in a bit of global tit-for-tat, China has reportedly banned its own tech companies from using Nvidia chips. GAIN AI doesn't make us safer; potentially it makes us less influential.
Lastly, GAIN AI makes no distinction between cutting-edge US chips and their less sophisticated ancestors.
Nobody is suggesting the U.S. allow the sales of cutting-edge chips to hostile nations but the horse has long been out of the barn when it comes to selling older models.
Selling China older chips doesn’t endanger our national security, offer China reverse-engineering opportunities or provide any military advantages whatsoever.
China is already capable of producing sophisticated AI chips. It doesn’t need our help.
Congress must abandon GAIN AI and stop pretending to have expertise on issues it clearly doesn’t understand. Congress has many tools in its tool box to protect the American people in ways GAIN AI purports to do.
It is amazing, Congress is so often unable to remember that its participation in sweeping regulation such as GAIN AIalways seems to backfire. The Trump Administration knows what it’s doing here.
This writer is reminded of the hilariously named Affordable Care Act (ACA), which turned out to be the most expensive, backward policy failure of his lifetime.
Congress has been incapable of taming this behemoth.
A few years ago, Congress mustered nearly enough votes to kill off ACA for good.
But the drive got thwarted by a single senator who wanted to stick it to the White House rather than make good public policy, thus condemning us to this bad legislation for years to come.
Let’s not do this again with GAIN AI.
We shouldn't let two senators dictate the terms of complex, potentially debilitating industrial trade policy.
Congress should reject this legislation, stick to its oversight role, allowing the experts to sail these waters on our behalf without the ham-fisted overreaching GAIN AI.
Mike Flanagan represented the 5th District of Illinois in the U.S. House of Representatives. For More of his Reports — Click Here Now.
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