The U.S. should create a new multilateral export control regime to counter China’s unfair industrial policies and misuse of sensitive technologies, said Mark Dallas, an associate professor at Union College in New York and a fellow with the Council on Foreign Relations. A new regime would create a “unified, clear and multilateral voice” around export controls and would reduce “commercial tensions” between the U.S. and its allies through better information sharing and enforcement.
Exports to China
After receiving criticism this week for its lack of progress in a possible investigation of illegal exports to Huawei, a Bureau of Industry and Security spokesperson said the agency is “committed to fully investigating any allegation” of violations of the foreign direct product rule, including illegal shipments to the Chinese technology giant. The agency has come under criticism for not yet penalizing Seagate Technologies for potentially illegally exporting goods to Huawei (see 2206070011).
The Bureau of Industry and Security June 8 issued a temporary denial order for three U.S. companies for their involvement in illegally exported technical drawings and blueprints to China. BIS said it suspended the export privileges for Quicksilver Manufacturing, Rapid Cut and U.S. Prototype for 180 days after they illegally exported materials used to 3D print satellite, rocket and defense-related prototypes, which are subject to strict export controls because of their “sensitivity and importance to U.S. national security,” BIS said.
The Bureau of Industry and Security by now should have penalized Seagate Technologies for illegally exporting goods to Huawei, James Mulvenon, a China technology and military expert, wrote in a June 6 post for the Lawfare blog. Mulvenon said BIS’s “inaction” has emboldened other companies to export similar shipments and is indicative of a larger enforcement issue at BIS surrounding its foreign direct product rule for Huawei.
China’s new export controls law may apply to a broader range of items than just dual-use goods, Baker McKenzie said in a June alert. In draft regulations released earlier this year (see 2204270040), China included a provision that will allow it to also restrict exports of non dual-use goods, which could include artificial-intelligence or integrated-circuit design technologies “that are currently regulated under a separate legacy technology import and export control regime,” the firm said.
The U.S. plans to build on and improve its export controls and investment screening measures to keep China from acquiring sensitive technologies, Secretary of State Antony Blinken said. Blinken, in a speech outlining the Biden administration’s China policy, also urged industry to reassess whether the price of doing business in China is worth the benefits and to work with the administration to push back against Beijing's unfair market practices.
Bureau of Industry and Security Undersecretary Alan Estevez said his top long-term priority is building a new multilateral export control regime, and he urged industry to continue considering diversifying away from China and Russia. He also said BIS is working hard to control emerging and foundational technologies and welcomes more input from industry, academia and think tanks.
The U.S.-EU Trade and Technology Council hopes to make progress around the idea of a new multilateral export control regime by the TTC’s next ministerial meeting this fall, Commerce Secretary Gina Raimondo said. She said the group is thinking about which U.S. and EU technologies are “especially significant” and warrant multilateral controls, such as semiconductor equipment.
Commerce Secretary Gina Raimondo said she supports including an outbound investment screening provision in the final version of Congress’ China competition bill (see 2202030062), and said more guardrails are needed to stop China from finding technology transfer loopholes. While Raimondo didn’t explicitly endorse the bipartisan National Critical Capabilities Defense Act, which would create a committee to review outbound investments, she said the U.S. could use more regulatory power.
The U.S. should take steps to address a range of loopholes in its export control regimes, including its inability to conduct end-use checks in China and unregulated technology transfers resulting from outbound investments, said Nazak Nikakhtar, former acting head of the Bureau of Industry and Security. “We have a lot of gaping holes in our export control system,” Nikakhtar told the Senate Intelligence Committee May 11. “I think we really need to tighten those up.”