US moves closer to expanding tech export controls list as competition with China for future technology builds

28-Oct-2020 Intellasia | South China Morning Post | 6:02 AM Print This Post

The US has completed a public comment period on finalising a list of technologies critical to American national security that will be subject to stringent export control rules.

The list is part of the Trump administration’s ramped-up efforts to control tech exports as competition with China over next-generation tech heats up.

The initial proposals for emerging tech and foundational tech were announced in 2018, at the time when the US started cracking down on Chinese smartphone and 5G tech giants Huawei Technologies and ZTE.

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But the process to redefine the list has been slow to strike a delicate balance of safeguarding national security while avoiding depressing foreign investment and domestic innovation in the industry.

In another step toward implementing the long delayed provisions, the Commerce Department wrapped up the 57-day comment period on Monday seeking industry input on how to identify, define and set criteria for “foundational technologies” that historically have not been subject to such rules.

These technologies, once finalised, will be added to the Commerce Control List and be restricted from being exported to certain countries.

Industry comments on the proposed rules of foundational technologies were mixed with aggression and caution.

“Even [if] no outside supplier is allowed to ship certain product to a company, countries like China would try to develop the technology by itself under state controlled national plan,” wrote one commenter identified as James Michael.

“China government is already doing so” to develop sensitive technology “using US equipment, US IP, US software and with US engineers (Chinese-Americans)” wrote Michael. And “it is important those Chinese companies developing sensitive technology with US technology are also restricted”.

Another commenter cautioned: “If you really want to screw China, no tools and no software can reach their shores or be used to make parts that reach their shores. It will hurt China in the short term, no doubt. The longer term impacts are negative for the US high tech industry (and domestic economy), and China may respond meaningfully after November 2nd.”

Since the Export Control Reform Act was signed into law in August 2018, the Commerce Department has been conducting a review to re-categorise “emerging and foundational technologies”.

Broken into two parts, the Commerce first identified “emerging technologies” with 14 categories including biotechnology, artificial intelligence, and robotics.

Four categories have been finalised including specific purchases of chemicals for chemical weapons and artificial intelligence technology used for geospatial analysis.

The Commerce Department in January issued its first in a series of new rules imposing export licensing requirements on these technologies. An implementation for foundational technologies is not expected to take place any time soon.

Additionally, any of the technologies, emerging and foundational, will also be considered “critical technologies”, all of which could require a mandatory notification to the Committee on Foreign Investment in the United States (CFIUS), an inter-agency entity that reviews foreign acquisitions of US assets for national security concerns.

The “foundational” technologies are harder to define as technologies evolve fast. The agency instead outlined the general types that can potentially be considered foundational.

They include products generally used for military purposes, software and technologies required for mass weapon production, and products that could further foreign intelligence capability in country of concern.


Category: China

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