Through early 2026 the policy discussion shifted from documenting distillation to identifying an instrument that could address it. Analysts and law reform bodies published proposals; the administration was reported to be weighing sanctions. The recurring difficulty was that the available tools were designed for a different problem.
The Entity List option
The most frequently discussed lever was Entity List designation. The logic is commercial rather than legal: placing a laboratory on the list dissuades American companies from doing business with it, and the resulting revenue damage is intended to change behaviour. Applied to a lab whose model is widely used by US developers, that is a real cost.
It is also a blunt instrument. Designation is an administrative act requiring an evidentiary record, and the record in these cases consists largely of traffic observations held by the complaining party.
Why export controls do not fit
Export controls restrict the movement of items. Distillation moves no item. A student model is trained on responses obtained through a public commercial interface, in a jurisdiction the operator chooses, on hardware the operator already has. There is no shipment to interdict and no licence to deny.
Research published during this period described distillation as a chain rather than an event: capability moves from a frontier model to a first recipient, and then onward again from that recipient to others, with each hop further from any controllable transaction.
What actually happened
Nothing, in enforcement terms. The proposals were published, the options were weighed, and by late July sanctions were still being described as available rather than applied. That remains the position.