AI Chip Rule Could Have Been More Carefully Crafted, Former State Dept. Official Says
The new artificial intelligence export control framework introduced by the U.S. earlier this month could create diplomatic issues with Europe and force some European nations to diversify away from U.S. chips, a former U.S. official and a European policy researcher said this week.
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Philip Luck, who left the State Department in January after more than two years as its deputy chief economist, said the U.S. may not have properly accounted for how the Bureau of Industry and Security rule could raise tensions with key EU allies.
“Obviously this was a very long, deliberative process,” Luck said during a think tank event in Brussels this week. “I will tell you, though, that the NATO desk was not consulted. So I think there are issues there. I think we could have thought about that more.”
The BIS rule, one of the final export control regulations issued by the Biden administration, grouped the world into roughly three categories of countries, each of which will face different export license requirements for certain advanced chips (see 2501130026). The U.S. and 18 other countries are in Tier 1 -- the group of nations subject to the least restrictions -- while most of the world is in Tier 2 and will face more stringent rules.
Luck and Antonio Calcara, head of the geopolitics and technology program at the Brussels-based Center for Security, Diplomacy and Strategy, said they weren’t sure why an EU member state like Estonia was left out of Tier 1. Luck called Estonia a “very high tech economy” and said it has “excellent export controls,” a condition used by the U.S. to select which countries would benefit from Tier 1 status.
“I was talking with a member state government official a few days [after the BIS rule was released] and they referenced the degree to which it looked similar to the Iron Curtain,” Luck said. “And so that's not the best.”
Calcara said the U.S. should move all or most EU member states into Tier 1, saying the current structure “could actually weaken the coherence of the European position” on semiconductor export controls, especially if some nations can buy advanced chips that others cannot.
It could “lead some European countries to diversify their suppliers, given that they will face increasing restrictions when it comes to U.S. computing power,” he said during the event, hosted jointly by the Peterson Institute for International Economics and the Center for Security, Diplomacy and Strategy.
Calcara also said some in Europe are “worrying” that the U.S. could use the tier system “to move up or move down European countries” depending on whether “they will align or not with U.S preferences.”
Luck, who is now the director of the economics program and the international business chair at the Center for Strategic and International Studies, also touched on what he said are export enforcement issues within the EU. Although enforcement and licensing is generally carried out at the member state level, “that may not be sufficient going forward,” he said, suggesting that an EU body take charge.
“The EU really doesn't -- as far as I can tell in the conversations I've had -- there's limited capacity to do enforcement. End-use checks basically don't exist. And as a result, it's very hard to enforce export controls,” he said. While European nations can more easily enforce controls on high-value, low quantity exports -- such as advanced chip equipment -- Luck said they face challenges stopping illegal shipments of more common industrial equipment that could end up in Russia.
“We're going to need to have more ability to do enforcement, and that probably makes more sense as an EU competency,” Luck said.