Europe Remains Skeptical About Export Controls as US Lobbies for Support, Report Says

European governments are skeptical about the use of U.S. export controls to restrict transfers of sensitive technologies even as the U.S. ramps up attempts to convince them to adopt similar measures, according to a March 18 report from the Mercator Institute for China Studies. As the U.S. has taken an increasingly aggressive approach to restricting emerging technology sales to China, Europe increasingly sees export controls as a “blunt instrument” for tackling technology risks, the report said, viewing them instead as a U.S.-driven effort to contain China's rise.

The report comes as the Commerce Department works on a series of export controls on emerging technologies and an advance notice of proposed rulemaking for foundational technologies to restrict sales to China, as mandated by the Export Control Reform Act of 2018. Although a series of delays has plagued the effort (see 2002210026, 2002240033 and 2002040057), and Commerce has yet to issue an export control under ECRA authority, the U.S. is “poised to accelerate” its campaign this year and try to push Europe to follow suit, the report said.

Even though Europe shares U.S. concerns about China, many European countries maintain a “healthy skepticism” of export controls, the report said, which are viewed as a “blunt, antiquated instrument for curbing technology transfers in a world where supply chains are deeply integrated and global.” Many countries fear they will restrict innovation and disrupt supply chains, the report said, a fear shared by U.S. industry (see 1911070014). Europe is also concerned that U.S. export controls are less about countering Chinese acquisition of U.S. technology for military purposes and more of a general effort to contain China’s rise, which is “not a goal that European countries support.” European industry fears the U.S. efforts are “meant to shore up U.S. companies and industries at the expense of foreign rivals.”

But Europe cannot afford to ignore the U.S.’s push for cooperation, the report said, and likely needs to formulate its own plan to counter security risks that result from Chinese technology acquisitions or risk an “every country for itself” approach. That approach would divide European Union member states and undermine the leverage of the collective group on trade matters, the report said. In addition, if EU companies do not comply with U.S. export controls, they risk sanctions and harsh penalties.

U.S. officials are “keen” to establish dialogue with Europe and coordinate policy to combat China, the report said, including in areas of foreign direct investment (see 2002260042). Commerce Department Bureau of Industry and Security officials have stressed that they want to bring their export control proposals to multilateral regimes, such as the Wassenaar Arrangement (see 2003100049, 2001030024 and 1912160032). But European officials are skeptical that U.S. officials “have the patience to forge a consensus in Wassenaar, a painstaking process that can take several years,” the report said, and which would require agreement by more than 40 individual nations (see 2002180060). A more likely scenario may involve the U.S. pushing for an export control consensus among a “targeted group of allies,” the report said, including Europe and Japan.