US Businesses Could Lose Billions From Commerce's Export Controls on Emerging Technologies, Report Says
The Trump administration's decision to examine emerging technologies as candidates for export controls could cost U.S. businesses tens of billions of dollars and threaten thousands of jobs, the Information Technology and Innovation Foundation said in a new report. If substantial export controls are enacted, the report warns, firms “could lose $14.1 [billion] to $56.3 billion in export sales over five years, with missed export opportunities threatening from 18,000 to 74,000 jobs.”
ITIF's findings stem from the Commerce Department’s Bureau of Industry and Security’s initiative to expand export controls to technologies that are or may soon be essential to national security but are not yet export-regulated. In a Nov. 19, 2018, notice, Commerce sought feedback from companies on “identifying emerging technologies,” including biotechnology, microprocessor and advanced computing technologies, and artificial intelligence and machine learning technology. The aim of the notice and the initiative, Commerce said, was to identify candidates for export controls on technologies that “have not yet been evaluated for their national security impact.”
But the ITIF report warns of the harm that could result from Commerce “defining an overly restrictive set” of technologies, saying it could “significantly impede” the competitiveness of certain U.S. industries and stifle their “output, exports and employment growth.” While the report calls the “objective of protecting” national security “laudable and critical,” they also come with “dangers," ITIF said. “Imposing export controls necessarily harms domestic firms in the short run, reducing their sales and thus their ability to reinvest profits in the R&D that enables them to continue to innovate and to create the high-paying, tech-based jobs associated with cutting-edge technology sectors,” the report said. It also said imposing controls on products that are globally available redirects “revenues from firms in the United States to their foreign competitors.”
The report also pointed to the dangers that “overly broad” export controls can have on product development, saying it slows product development by adding steps “such as the need to secure deemed-export licenses for employees or technology-transfer licenses for partners or subsidiaries.” The report also said some companies might choose to abandon certain technology development because of the “added burden” of the controls. Perhaps the industry that would be most affected is the aerospace sector, the report said, which would lose $930 million in exports and more than 5,339 jobs in one year if new export controls cut exports by 5 percent.
The report includes several suggestions for mitigating the economic impacts of export controls, including only placing export controls on emerging technologies “in cases of exclusive development and availability within the U.S. market” so as not to harm global competitiveness. The report also said that BIS’s “scope of controls for emerging products” should be limited to products that “provide a specific, identifiable, and qualitative military advantage” and not cover “long-established technologies.”