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Wassenaar Can’t ‘Adapt’ to Modern Export Control Concerns, Former NSC Official Says

The U.S. needs to abandon the current model of multilateral export control regimes and move toward control agreements with smaller groups of allies in specific technology areas, said Liza Tobin, the National Security Council’s former China director. Tobin, speaking during an Emerging Technology Technical Advisory Committee meeting last week, also said the U.S. should look to impose technology-specific controls on items destined to China rather than end-use- and end-user-based controls, which are proving increasingly ineffective.

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Tobin, senior director for economy at the Special Competitive Studies Project, was speaking at the Bureau of Industry and Security's ETTAC meeting alongside other members of the SCSP about a series of recent reports the group has published on U.S. technology competitiveness. Their most recent report issued this month outlined a new model for American technology innovation and competition, and another report argued that U.S. export restrictions are “failing to stem the flow of advanced technology” to China. That report said America needs to “lead in the creation of a new multilateral export controls regime that addresses the contemporary challenges” of national security, human rights issues and other concerns.

Tobin said the U.S. needs new regimes that are “smaller, more agile.” She said she doesn’t think the Wassenaar Arrangement “will be able to adapt to a new era of emerging technologies,” especially because Russia remains a voting member.

The U.S. should abandon the current regime model and instead work with “a smaller set of countries” on a case-by-case technology basis, Tobin said, pointing specifically to countries that have capabilities to produce advanced artificial intelligence technologies or biotechnologies. “These seem to be smaller, more agile and fit for purpose,” she said.

Other export control experts have said the U.S. should create a new multilateral regime with technology-producing nations that share democratic values (see 2205240039), and the Bureau of Industry and Security has been exploring its own “multilateral export control framework,” but it remains unclear if the effort will result in any new, formal regimes (see 2206290032).

Tobin also said the U.S. should rethink how it imposes export controls against China. While end-use and end-user controls make sense in some cases, they don’t account for China’s civil-military fusion, she said, which can make it difficult for U.S. exporters to determine whether an end-user in China is affiliated with the government. U.S. companies have long struggled to conduct due diligence on exports that could be subject to BIS’s Chinese military end-user restrictions, partly because obtaining information on ownership or affiliations of Chinese entities can be a challenge (see 2007090075, 2102190042, 2105050048 and 2201270063).

“Beijing is executing strategies that bring together industry and the defense sector in new ways that make some of our end-use- and end-user-based controls no longer useful in the case of China because of the way they blur those lines,” Tobin said.

The U.S. should design “new controls that are based on the technology itself” while “banning certain sensitive technologies from going to China as a whole because of the inability of these end-user and end-use checks to operate within the ecosystem that Beijing has developed.”

The SCSP report also suggests broader investment screening tools to prevent sensitive technology from flowing to China. The group called on the U.S. to expand the jurisdiction of the Committee on Foreign Investment in the U.S. to allow it to review investments involving a “wider set of technologies” and broaden its oversight of “more joint ventures and minority positions in investments.”

It also said the U.S. needs an outbound investment screening mechanism that can block China from acquiring certain technologies outside of the guardrails of export controls, including advanced semiconductors, aerospace technology and biotechnologies. The Biden administration is considering creating an outbound investment review regime (see 2209140041), and lawmakers (see 2210040025) and a congressional panel (see 2211160017) are pushing for the mechanism as well.

PJ Maykish, also with the Special Competitive Studies Project, said the group’s research partially stemmed from the fact that “there's a great deal of evidence that the United States was not organized to compete” with China in a range of technology areas. Maykish, the NSC’s former director for international technology competition, specifically pointed to microelectronics and AI.

Tobin said the U.S. needs to develop a “techno-industrial strategy” to better compete with China, but she stressed that the group isn’t calling for a trade ban. “We're not proposing an abrupt or full-scale decoupling between the U.S. and Chinese economies,” she said. “We're suggesting that we need to reduce overexposure to [China] in areas where entanglement puts our national security and our competitiveness at risk.”