Dual-Use Technology and U.S. Export Controls

Hannah Kelley

Source Link

Technology is a key enabler of political, military, and economic power. As technical competence grows more diffused, middle powers such as India and Brazil are emerging as technological leaders while authoritarian states are wielding technology to challenge liberal norms and institutions. In response, the United States increasingly turns to export controls to promote its foreign policy and national security interests and deter problematic actors from using U.S.-origin technology in malign ways.

Although U.S. export controls were originally created to regulate items with clear military inputs and use cases, today’s critical technologies—from artificial intelligence to quantum computing to space technologies—are more often borne out of the commercial sector.1 Carrying both commercial and military applications, dual-use technologies are more difficult to regulate at both the national and international levels.

The United States is thus working toward an export control strategy that addresses a broader range of foreign policy objectives—such as preventing human rights abuses and supply chain disruptions—while accounting for the dual-use characteristics of critical technologies and a shifting geopolitical landscape. It is likewise trying to work these changes into the existing regulatory frameworks of allies and partners.2

Current U.S. statutory language is robust—including the U.S. Export Control Reform Act of 2018 (ECRA), which codified authorities for export controls on dual-use technology.3 For example, ECRA clarified the scope of U.S. export controls to include “the protection of human rights and the promotion of democracy” as key U.S. foreign policy interests.4 It highlights the importance of military interoperability with North Atlantic Treaty Organization (NATO) and other allies and calls for tailored controls to protect core technologies and items that, if misused, could seriously threaten U.S. national security. ECRA also maintains that while unilateral controls are useful to protect specific U.S. foreign policy and national security interests, coordinated multilateral controls are generally more effective in the long term in addressing broader international security issues.5

The challenge with U.S. export control policy is not the language. Rather, it is how the U.S. government can best apply its statutes to promote its interests and effectively coordinate with like-minded states, while also keeping pace with rapid technological change.

This commentary explores key insights drawn from CNAS Technology Policy Lab discussions on the current scope and objectives of U.S. export control policy. It proposes several recommendations—further developed by participants since the Lab’s conclusion—to refine U.S. export control strategy and enhance cooperation with like-minded states.

The following core questions guided the Lab’s discussions:As the United States increasingly employs export controls to achieve its national security and foreign policy objectives, how should the U.S. government identify and prioritize the specific technologies that need regulation?

How should the United States appropriately tailor and apply its export controls to effectively respond to new and emerging technologies and use cases?

How effective are current multilateral export control frameworks in impeding illiberal technology use, given difficulties regulating use compared to items or component parts, the rapid pace of technology development, and the changing geopolitical and global threat landscape?

The United States needs the expertise of the private sector to adequately identify and prioritize critical technologies for regulation. In the past, U.S. government–funded research projects fostered the development of linchpin technologies such as the global positioning system and the transistor.6 Today, private industry drives U.S. innovation. ECRA mandates that industry and academia support the identification of critical technologies—a strong first step toward formalizing public–private cooperation on technology regulation.7

Carrying both commercial and military applications, dual-use technologies are more difficult to regulate at both the national and international levels.

The Emerging Technology Technical Advisory Committee (TAC) puts this public–private cooperation into practice at the domestic level. Comprised of representatives from U.S. industry and government with a secret-level clearance, the Emerging Technology TAC meets quarterly to help identify potential dual-use technologies and advise the U.S. Department of Commerce on relevant export control parameters.8 Similar export control policy discussions are taking place across the U.S. interagency with more focus on international coordination, including within the U.S. Department of State. However, persistent challenges such as data classification issues, security clearance requirements, and cultural differences between industry and government make it difficult to integrate industry perspectives.9

Additionally, to better inform its supply chain–disruption mitigation strategies, U.S. industry generally wants information on new or updated export controls sooner than the government is willing to release it. This is due in part to government concern that industry might use the information to lobby against the controls or somehow tip off adversaries, allowing them to stockpile technology inputs. There is, therefore, a tension between industry representatives wanting more information from the government on forthcoming controls while still receiving quick-turn government requests for information on technical specifications.

To best tailor and apply its export controls, the United States also requires complementary commitment from technology-leading allies and partners. The United States is limited in its ability to unilaterally control technologies because it no longer dominates the global technology research and development (R&D) or manufacturing landscapes. U.S. dominance in commercial nuclear energy in the 1970s, for instance, allowed the United States to keep Taiwan and South Korea from developing their own nuclear site facilities.10 Today, effective regulation demands more multilateral cooperation since emerging technology industry dominance is increasingly diffused along complex supply chains.11

A clear and recent example of this dynamic is the global semiconductor industry and the rapid development of advanced node chips. On October 7, 2022, the United States enacted severe unilateral export controls against the People’s Republic of China (PRC) to curb its access to and development of advanced node semiconductor chips and supercomputers that underpin its defense and surveillance technologies.12 However, due to the fragmentation of the global semiconductor supply chain, the United States needed the complementary commitment of leading chip-making tool producers—specifically Japan and the Netherlands—to effectively restrict Chinese access and development.13

To best tailor and apply its export controls, the United States also requires complementary commitment from technology-leading allies and partners.

Despite the increasing need for export control coordination between like-minded states, existing multilateral export control frameworks are too narrowly scoped to address today’s technological challenges. Current multilateral country–agnostic regimes such as the Wassenaar Arrangement, which coordinates multilateral export controls on dual-use technologies, focus on nonproliferation and conventional military–related objectives.14 These regimes are otherwise constrained in addressing emerging technologies, technology-enabled human rights violations, global supply chain disruptions, and China’s military–civil fusion strategy.

Current regimes are also consensus-based, making them transparent and inclusive but enabling individual members to intentionally impede critical export control action.15 For example, Russia’s membership in the Wassenaar Arrangement allows Moscow to undermine the development and enactment of new controls in response to its own invasion and continued war in Ukraine. Because of this, other members have had to pursue ad hoc controls outside of the multilateral Wassenaar Arrangement process.16

Considering these insights, the following recommendations build upon ideas raised by CNAS Technology Policy Lab participants to bolster U.S. domestic regulatory posture and export control alignment with allies and partners.

The White House must clearly articulate the national and international security objectives underpinning U.S. use of defensive economic tools to ensure constructive cooperation with allies and partners. Both U.S. National Security Advisor Jake Sullivan and Secretary of the Treasury Janet Yellen have reiterated that national security, not economic competitiveness, is the primary driver of U.S. export control policy. Meanwhile, U.S. policymakers have prioritized export control goalsetting within the Australia–United Kingdom–United States (AUKUS) trilateral security pact.17 These discussions should be expanded to include the use of other defensive economic tools, such as inbound investment screenings and outbound investment reviews, and should likewise take place within the United States–European Union (U.S.–EU) Trade and Technology Council (TTC), the Quad, and the G-7.18 Washington must reconfirm that U.S.–China tensions are not pushing the United States toward a new era of technology protectionism. Rather, strategic competition with China will necessitate even more international coordination and information-sharing among the world’s leading techno-democracies in the decades to come.

The U.S. interagency should replicate the Department of Commerce’s Emerging Technology TAC model wherever export controls are being discussed, to better integrate industry perspectives into export control development, deployment, and messaging strategies. The United States should likewise promote this approach in multilateral export control forums to enhance cross-national information-sharing for identifying and prioritizing critical technologies. Though not an export control regime, the U.S.–EU TTC is a good example of multilateral industry engagement as it invites private sector partners to organized events and solicits direct input on TTC discussions. In this same vein, the United States and its allies should develop concrete technology transfer and research guidelines to further encourage industry innovation.

The U.S. interagency should also pursue more formal relationships with independent research institutions such as academia, think tanks, and federally funded R&D centers (FFRDCs) for third-party technological analyses. This would help the government overcome some of the challenges with fully integrating industry into the export control development process, including security clearance issues and concerns about lobbying or providing advance warning to foreign counterparts. By relying on more neutral sources for technical specification information, industry could more freely consult the U.S. government on critical technology identification and supply chain mapping.

Congress should mandate the creation of and appropriate funds for a new unit within the U.S. Department of Commerce to explore the long-term economic impacts of export controls.19 This unit could be modeled after the U.S. Department of the Treasury’s Sanctions Economic Analysis Unit, which was announced in Fall 2022 to study the long-term economic impacts of sanctions.20 Similar analyses on export controls would better inform future U.S. national security policy development and deployment.

The White House should continue engaging with allies and partners on the creation of a new multilateral export control regime to complement existing regimes and better respond to today’s technological and geopolitical landscape.21 Such a regime would comprise a core grouping of techno-democracies. It would act as a coordination mechanism in identifying technologies of shared concern and developing new controls with a broader range of policy objectives. These could include controls designed to address country-specific issues or activities of concern such as human rights abuses. The new regime could likewise coordinate the use of other defensive economic tools such as inbound investment reviews and outbound investment controls. Launched at the March 2023 Summit for Democracy, the new Export Controls and Human Rights Initiative drives at this expansion of policy objectives but requires additional maturation and a conducive regime to effectively coordinate multilateral action.22

The United States should drive toward interim measures to strengthen export control coordination within existing multilateral regimes as U.S. allied and partner reactions to a new regime vary, and establishing sustained political will takes time. For example, the United States and its allies and partners should leverage the Wassenaar Arrangement experts group to better coordinate plurilateral controls and avoid the long-term use of ad hoc controls that could further fragment critical supply chains. The international community also needs more public datasets on critical and emerging technology supply and value chains to aid in this decision-making. Additionally, like-minded states should work to align their licensing and review policies to enhance existing coordination channels.

Finally, the U.S. government should appoint a high-level special envoy to advance diplomatic efforts related to export control issues. Adequate support for this position would require coordination between both the U.S. Department of Commerce (for its technical expertise) and the U.S. Department of State (for its global reach).

Maintaining robust dialogue with allies and partners in scoping a new multilateral export control regime is critical as states have different strategic objectives, regulatory frameworks, bureaucratic capacities, threat perceptions, and risk-tolerance levels. For example, states differ on their strategies regarding China, as well the role of economic restrictions within those strategies, which could undermine the potential for future country-specific controls.

To ensure that U.S. export controls are effective in deterring illiberal technology use going forward, the United States should prioritize public–private cooperation and conduct robust, long-term analysis on the economic impacts of export controls. Washington should clearly articulate its national security and foreign policy objectives to allies and partners, and initiate conversations on the creation of a new multilateral export control regime to better respond to today’s rapidly evolving technological landscape.

Acknowledgments

This CNAS Technology Policy Lab was made possible with the generous support of Schmidt Futures. CNAS also thanks all experts who participated in this Lab.

As a research and policy institution committed to the highest standards of organizational, intellectual, and personal integrity, CNAS maintains strict intellectual independence and sole editorial discretion and control over its ideas, projects, publications, events, and other research activities. CNAS does not take institutional positions on policy issues and the content of CNAS publications reflects the views of their authors alone. In keeping with its mission and values, CNAS does not engage in lobbying activities and complies fully with all applicable federal, state, and local laws. CNAS will not engage in any representational activities or advocacy on behalf of any entities or interests and, to the extent that the Center accepts funding from non-U.S. sources, its activities will be limited to bona fide scholastic, academic, and research-related activities, consistent with applicable federal law. The Center publicly acknowledges on its website annually all donors who contribute.

About the Technology Policy Lab

This policy brief is a product of the CNAS Technology Policy Lab, a working group structure designed to incubate solutions to crucial yet underdeveloped technology policy problems. Each lab is composed of subject matter experts from academia, industry, and the policy community collaborating to develop concrete recommendations to bolster U.S. national security interests and promote American competitiveness. We thank all experts who participated in this Lab.