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The current export control measures of the United States damage its core competitiveness

by YCPress

Recently, the New American Security Center (CNAS) published an article entitled Reflection on Export Controls: Unintended Consequences and New Technology Patterns, written by Martin Rather, a senior researcher of the Center.

The article believes that the original intention of U.S. export control is to ensure that the United States enjoys an overwhelming technological dominance.

The appropriate use of export control in terms of affecting the military potential of other countries, promoting the implementation of their main foreign policy objectives, and fulfilling international obligations is conducive to safeguarding the national security of the United States.

However, the current export control measures are harming the economic and technological competitiveness of the United States. The United States should use export control policies more cautiously and strategically, and its first task should be to formulate multilateral technology restrictions.

The article believes that although the United States is still the world’s technological leader, it has lost its global hegemony. Global R&D spending is more evenly distributed and technology is more dispersed than 20 years ago.

Other countries are increasingly powerful in specific technology fields, opening up access to alternative technologies. And the U.S. export control authorities have neither kept pace with the rapid development of technology nor reflected the current situation.

Since the mid-20th century, the changes in the technological landscape have been reflected in the following three aspects.

First, the continuous shrinking of the global R&D share of the United States and the neglect of basic research have led to the loss of its global R&D dominance and have a significant impact on national security.

Although the share of total R&D expenditure in GDP in the United States has been stable at about 3%, its share of global research and development has dropped from 69% in 1960 to 28% in 2018.

The same trend is true for defense-related research and development: in 1960, the United States’ defense research and development investment accounted for 36% of global data; in 2016, this proportion fell to 3.7%.

Second, with technological progress and the global dissemination of know-how, as well as the widespread use of basic and emerging technologies, highly globalized supply chains have eliminated enterprise monopolies to a certain extent.

Although this can improve productivity, it also causes enterprises to rely on foreign countries for critical supply chains.

Third, multi-channel technology transfer effectively circumvents export control. The diversity of sources of access to know-how reduces the effectiveness of unilateral export controls.

The article believes that the current export control has limited the competitiveness of the United States.

Cumbersome procedures and excessive operating costs are eroding the competitiveness and market share of American companies; in order to avoid trouble, foreign entities will try their best to exclude goods originating in the United States in their supply chains; when American enterprises are limited by export controls, they will create opportunities for foreign competitors; and accelerate the localization of technology in other countries, etc., all show that The United States is suffering from the adverse consequences of export controls.

The article proposes that in order to ensure the global strategic competitiveness with technology as the core, American policymakers should formulate relevant laws and regulations on export control under the guidance of the following three principles:

First of all, cooperate with allies. In most cases, export controls must be implemented on a multilateral basis. Unilateral sanctions may lead to or even accelerate the “de-Americanization” of supply chains, which in turn threatens the technological competitiveness of the United States.

Secondly, raise the threshold. Export controls should be used as a strategic priority to promote and maintain technological competitiveness, not a compromise strategy. Export controls for individual or a small number of entities are difficult to implement and costly.

Thirdly, set the goal again. Export control is not an end in itself. Investment in research and development of the new generation of technologies needs to be carried out simultaneously to lay the foundation for continuous competitiveness. Export control should be part of the overall technology strategy and the broader economic governance strategy, rather than decentralized policy action.

The article concludes that for American decision-making, the formulation of multilateral technology restrictions should be the top priority at present. At the same time, export controls should be used more cautiously and strategically to adapt to the current geopolitical background and the new global technological pattern, so as to ensure that export controls remain an effective tool for the United States to achieve foreign policy goals and maintain national security.