Research Group on 'Security and Emerging Technologies' #9
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Competition among great powers is accelerating moves to review international interdependence from the perspectives of foreign policy and national security. Since 2019, the US Department of Commerce has introduced export control of emerging technologies, in essence managing international interdependence based on foreign policy and security logic. With the above in mind, this report examines the US government's export control of emerging technologies and its implications.
An Open World and Technology Controls
The expansion and deepening of international interdependence have not only contributed to the growth of the international economy, but also enabled a cross-border ecosystem of science and technology and contributed to the development of science and technology. In particular, the digitalization of information has spurred this trend, leading to massive amounts of data being transferred, processed, and stored across national borders; diverse expertise being exchanged online; and the barriers between science and technology professionals and amateurs being lowered. The government has been able to monopolize only a limited number of advanced technology fields, as the presence of private companies and individuals in research and development (R&D) has seen a relative increase. At the same time, there is also a growing interest in security issues stemming from open innovation ecosystems. There is concern that a transnational, open innovation ecosystem may be a source of leakage of militarily sensitive technologies. This rising concern is a consequence of the inability of states to fully grasp and control the value chains of the products and technologies.
As a result, governments are faced with the difficult challenge of preventing leakage of technology while maintaining open innovation to increase their technological capabilities. In 2016, for example, Christopher A. Ford, then Assistant Secretary of State for International Security and Non-Proliferation, argued that the challenge was to deal with security threats while preserving the possibility of cooperation with China1. An appropriate balance between maintaining open technology ecosystems and preventing technology leakage is being sought.
Identification and Export Control of Emerging Technologies
In the US, efforts continue to subject emerging technologies to export controls. The Fiscal Year 2019 National Defense Authorization Act (NDAA), passed on August 13, 2018, includes the Export Control Reform Act of 2018 (ECRA) that provides a legal basis for the authority of the Bureau of Industry and Security (BIS) at the Department of Commerce, with Section 1758 providing the legal basis for the export controls of emerging technologies2. Under the ECRA, the President is responsible for launching interagency processes led by the Department of Commerce and involving the Department of State, the Department of Defense, the Department of Energy, and other agencies to identify emerging technologies essential to the national security of the US, and the Secretary of Commerce is to establish appropriate controls on the export, reexport, or in-country transfer of technology identified. The Secretary of Commerce is then to recommend that any newly identified emergint technologies to be placed on the list of technologies controlled by the relevant multilateral export control regimes.
However, because the ECRA did not provide detailed definitions and identification parameters for emerging technologies, the BIS in November 2018 issued an advance notice of proposed rulemaking (ANPRM), which welcomed public comments on the definition and identification criteria for emerging technologies and the effects and impacts of export controls. The ANPRM presented a list of 14 representative general categories of emerging technologies, including biotechnology, artificial intelligence (AI) and quantum computing3. 247 comments were submitted in response to the ANPRM.
About six months after the publication of the ANPRM, on May 23, 2019, the first export controls for emerging technologies were announced. Five emerging technologies, including discrete microwave transistors, post-quantum cryptography and air-launch platforms, were placed on the Commerce Control List (CCL) in the Export Administration Regulations (EAR). BIS described these technologies as "recently developed or developing technologies" and "essential to the national security of the United States."4 About six months later, on January 6, 2020, the second round of emerging technology export controls was announced, and AI software 'specially designed' to automate the analysis of geospatial imagery and point clouds became subject to unilateral export control by the US5. However, in the above two cases, export controls for emerging technologies were implemented not in accordance with the ECRA but through the existing EAR framework. The former revised the CCL to reflect certain changes made to the Wassenaar Arrangement List of Dual-Use Goods and Technologies, as agreed by governments participating in the Wassenaar Arrangement (WA) at the December 2018 WA Plenary meeting, while the latter was based on the addition of certain AI software to the 0Y521 series of Export Control Classification Numbers (ECCN). More than a year after the November 2018 ANPRM, there were only two published rules related to emerging technology export controls. That was a slower pace than initially predicted.
However, since the first meeting of the Emerging Technology Technical Advisory Committee (ETTAC), which advises the Department of Commerce on the identification of emerging technologies, was held on May 19, 2020, export control of emerging technologies has been introduced in accordance with the ECRA. On June 17, following the first ETTAC meeting, the BIS added 24 additional chemical weapons precursors and single-use cultivation chambers to the CCL as part of the third round of emerging technology export controls, subjecting them to export control6. On October 5 of the same year, BIS presented its fourth round of emerging technology export controls, covering six emerging technologies that included hybrid additive manufacturing (AM), technology for finishing wafers for 5nm production, digital forensics tools and sub-orbital craft7.
Technologies specified in the third and fourth rounds of emerging technology export controls have been identified as emerging technologies essential to the national security of the US by the interagency process under the ECRA. These identified emerging technologies were proposed to the relevant multilateral export control regimes and then placed on the export control lists of each regime in accordance with agreements by members of those export control regimes. The third and fourth rounds also have aspects of domestic implementation of these export control regimes. The former reflected the decisions made at the February 2020 Australia Group (AG) Intersessional Implementation Meeting, and the latter reflected some of the agreements reached by the WA during the WA December 2019 Plenary Meeting.
Management of International Interdependence by the US
The US government's export control of emerging technologies seeks to regulate the cross-border flow of items through foreign policy and security logic. The following points can be observed. First, the US government prioritizes reaching international agreements over the expeditious implementation of controls. In particular, the third and fourth rounds indicated that the BIS was in consultation with the multilateral export control regimes and was working to reach international agreemets. In addition, the US government appears to be seeking an international agreement that is not bound by the existing multilateral export control regimes. At the second ETTAC meeting on November 9, 2020, Matthew Borman, Deputy Assistant Secretary of Commerce for Export Administration, stated that regulations would be more effective if countries with the same levels of technological capabilities and export controls worked together. The US approach is also aimed at leveling the playing field. The US government's stance suggests that it wants to avoid placing US companies and research institutions in unfair positions within the international arena through unilateral measures.
Second, the US government is working to ensure that only security-sensitive items are subject to emerging technology export controls. For example, the second round of emerging technology export controls temporarily imposed unilateral measures on AI software. This does not mean that any AI software that could be used to automate the analysis of geospatial imagery and point clouds became controlled. AI software designed exclusively for automated analysis of geospatial imagery and point clouds was targeted. In addition, at a meeting of the Materials and Equipment TAC (METC) on November 20, 2019, Sean Ghannadian, a BIS official overseeing civilian aspects of the WA, revealed that the BIS was considering regulating AM technology, and stated that metals and ceramic coating technologies primarily used in aerospace and propulsion might be subject to control. This approach was also seen in the 'higher fences around fewer goods' approach of the early 1990s.
Third, in spite of the above, if the US government becomes acutely aware of security implications of an emerging technology, it will not hesitate to impose unilateral controls. This point is clearly shown in the second round of emerging technology export controls. The use of the 0Y521 control means that the BIS can and will impose unilateral controls when it perceives an imminent threat to US national security interests. In addition to the second round of regulations, the BIS has said it is willing to impose unilateral controls on items with major security concerns. On November 5, 2020, the BIS stated that it was considering export controls for software that could be used to develop biological weapons, and expressed the view that such software was not controlled by the AG at that time and that the BIS regulations would therefore be unilateral in nature8. Since the era of COCOM, the US's unilateral measures have disturbed its allies and friends.
The essence of export control is to control the flow of items across national borders from the viewpoint of foreign policy or national security. According to the BIS's fiscal 2020 annual report, the BIS has imposed export controls on 37 emerging technologies9. As noted above, as international interdependence expands and deepens, a balance is being sought to protect technologies while maintaining an open innovation ecosystem. In response, the US's approach to export control of emerging technologies has been to place emphasis on international agreements, to target only a small number of items essential to its national security, but it does not hesitate to impose unilateral controls on technologies deemed to pose an imminent security threat. While this US approach is the result of pursuing a balance to ensure technology protection in an open world, it is not far from the US's traditional export control approach. However, if the power politics factor becomes dominant in future international circumstances, such as intensifying competition between great powers, there is a possibility that the motivation to shape international interdependence more in line with security logic will increase. This could lead to a new phase in US emerging technology export controls.
*After completing this report, the BIS announced its fifth round of emerging technology export controls on March 29, 2021. The measures entailed domestic implementation of the remainder of the 2019 WA Plenary Meeting decisions that were not covered by the fourth round of emerging technology export controls in October 202010.