New Export Control Regime Could Reduce Trade Tensions, Counter China, Professor Says

Although the U.S.’s export control regime provides the Commerce Department “wide latitude and substantial authorities” to target specific end-users and end-uses of critical technologies, they are “strictly unilateral and thus do economic damage to and alienate our closest allies,” Dallas said in written testimony before the U.S.-China Economic and Security Review Commission last week.

“Even if the U.S. were to ‘go it alone,’ US unilateral export controls are likely only to have a short-term impact before quickly weakening,” Dallas wrote. “Multilateralism achieves longer-term buy-in and durability.”

Dallas isn’t the first to suggest a new export control regime -- he specifically mentioned a plan outlined in May by Georgetown University’s Center for Security and Emerging Technology, which suggested a new regime composed of other technology-producing nations that share democratic values (see 2205240039). The regime, proposed by CSET research fellow Emily Weinstein and former Commerce official Kevin Wolf, could more effectively keep sensitive technologies from being misused by authoritarian governments and reduce pressure on the U.S. to impose unilateral controls, they said.

Commerce officials -- including Secretary Gina Raimondo and Bureau of Industry and Security Undersecretary Alan Estevez -- have also supported the idea of a new regime and said they are working to create one (see 2205250037 and 2205170034).

Dallas said there is an “inherent tension in our policy toolbox” for export controls over non-military emerging and foundational technologies. He said the current multilateral export control regimes, such as the Wassenaar Arrangement, are too “narrowly focused on traditional military applications,” including weapons of mass destruction, chemical and biological agents and conventional military technologies with “clear” military uses.

He also said the regimes often need consensus from all members -- including potentially Russia, which has been heavily sanctioned in recent months for its invasion of Ukraine -- to adopt new controls. “Thus, new technologies that pose non-military security threats or emergent issues that have non-military but strategic importance cannot be dealt with on a formal multilateral basis,” Dallas said.

A new regime, which would at first include only a “small handful of key high-tech allies,” could “combine the virtues of multilateralism with the effectiveness and precision of U.S. controls,” he said. It could specifically “free up trade between member countries even on controlled items” and help the U.S. and its allies better respond to Chinese-related supply chain issues.

“China would be unable to incentivize and peel off our allies on a bilateral basis, such as browbeating the Netherlands into selling them ASML produced photolithography semiconductor equipment,” Dallas said. China would also “be incentivized to join additional institutional settings to engage in dialogue over supply chains, cybersecurity and emerging technology issues.”

But Dallas also said a new multilateral export control forum would give China several “unexpected benefits” compared with U.S. unilateral controls. This includes creating a “higher bar to achieve multilateral agreement which would narrow the scope of export controls to truly critical ones,” Dallas said. “It would also institutionalize the process which indirectly benefits China through greater transparency and stability over time.”

The regime shouldn’t just apply to export controls, Dallas said -- it could also lead to multilateral foreign investment reviews. More FDI cooperation could “avoid investment reviews from potentially slipping through the cracks,” Dallas said, and “shed light on undisclosed coordination among Chinese companies.”