US Needs to End Unilateral Trade Restrictions to Counter China, Lawmaker, Former Officials Say

The U.S. needs to work closer with allies on export controls and foreign investment screening to counter China, a Republican House member and two former Trump administration officials said. They said the U.S.’s current unilateral approach to trade restrictions is not working and could cede U.S. technology leadership to China.

“I think one of the most important things that we can do is work in concert with our good friends around the globe and not be separated in our efforts,” said Rep. John Curtis, R-Utah, speaking during a Nov. 19 event hosted by the Parliamentary Intelligence-Security Forum. “We’re at a huge disadvantage if we try to tackle this differently.”

While China is still three to five years behind the U.S.’s semiconductor industry, that gap will continue to shrink if the U.S. does not do more to partner with allies to impose export restrictions on advanced technologies, said John VerWey, formerly an analyst with the Bureau of Industry and Security from 2016 to 2017. “The U.S. cannot act unilaterally in response to this,” said VerWey, a business intelligence analyst at U.Group. “We're going to need to pursue multilateral export controls.”

VerWey said the U.S. should be “most concerned about” China’s Semiconductor Manufacturing International Corporation, which is catching up to the manufacturing capabilities of Samsung, the Taiwan Semiconductor Manufacturing Company and Intel. “It continues to see success,” VerWey said. “In order for everything to work in the long term, the U.S. is going to have to act multilaterally, and in particular with the governments of Japan and the Netherlands, when it comes to semiconductor manufacturing.” U.S. industry has urged the Trump administration against unilateral controls (see 2010090044 and 1911070014), and BIS officials said they plan to pursue multilateral controls on emerging technologies (see 2011090045).

Curtis called for a “joint strategy” with the U.S.’s closest allies that should be centered “largely on trade” and transparency in technology. But while a joint strategy would be ideal, it might not be feasible, said Jamieson Greer, a trade lawyer with King & Spalding.

“We're hearing a lot from policymakers in America in particular about, ‘let’s work with our allies.’ But what does that mean?” said Greer, who also was a chief of staff for U.S. Trade Representative Robert Lighthizer. “Because, to be honest, I don't think all of our allies are in the same place on China.” While Greer said more U.S. allies have addressed foreign investment screening and the dangers of uncontrolled emerging and foundational technologies, he said others are still wary about ending their business connections with China.

“I think there are areas where there is a lot of cooperation,” Greer said. “But I do think there are business interests, and a lot of countries, whether it’s Germany or others, are making money in China and want to keep making money in China. They’re trying to tread carefully.”