To Counter China, US-Led Multilateral Chip Deal Can’t Be Based on Threats, Experts Say

The U.S. needs to “act quickly” to build a multilateral consensus on China export controls or risk other countries simply filling the vacuum left by the U.S. in China’s semiconductor market, two export control and national security policy experts said in a Dec. 30 piece for Foreign Affairs. Although U.S. officials have said they are confident an agreement with allies will soon be completed, the authors said it remains unclear whether the deal will create a “genuine, multilaterally controlled chokepoint” for advanced chip technologies.

A deal based on the “threat of further U.S. extraterritorial controls” may deliver short-term policy goals, but it will “only deepen the concerns of allies and their semiconductor industries about the costs of depending on U.S. technology and encourage such actors to develop alternatives,” wrote Sarah Bauerle Danzman, an Indiana University associate professor and former State Department official, and Emily Kilcrease, a senior fellow with the Center for a New American Security and former National Security Council official.

“Threats of new controls are not enough,” they said. “U.S. officials must work with partners to develop a shared understanding of how to best respond to Chinese technological advancement.”

The U.S. in October released a range of new export controls designed to restrict China’s ability to acquire advanced computing chips and manufacture advanced semiconductors (see 2210070049). Officials, including Bureau of Industry and Security Undersecretary Alan Estevez, have said they are working to convince other allies to impose similar controls and are confident an agreement will soon be reached (see 2210270047). Japan and the Netherlands have reportedly “agreed in principle” to join the U.S. in imposing at least some of the new controls (see 2212120008).

A multilateral control strategy could succeed, Danzman and Kilcrease said, but the U.S. must work with its allies to build a “shared strategy to responsibly manage the technology competition with China.” The U.S. will likely “face challenges in seeking such a consensus,” including from allies who are unsure if it’s “wise to freeze China’s commercial capabilities” and whether they have the “legal authority” and enforcement ability to impose the controls.

The authors also stressed that the U.S. and its partners still have “fundamental disagreements” about the use of export controls against China -- the Netherlands’ foreign trade minister said in November the country wouldn’t mirror the U.S. restrictions and would impose new restrictions “on our own terms” (see 2211210035).

“U.S. officials must have difficult conversations with allies about how wide the yard and how tall the fence should be with respect to so-called dual-use technologies,” Danzman and Kilcrease said. U.S. unilateral control against China will create a “greater shock to the supply chain” than restrictions against just one entity, they said, such as the unilateral strategy against Huawei used by the U.S.

Applying far-reaching, unilateral restrictions against an entire country’s semiconductor industry increases the risk that other nations will “ice out U.S. suppliers as a matter of protecting their autonomy and preserving their ability to sell globally -- including in China,” the article said. “It is therefore likely that foreign firms and governments will increasingly view reliance on U.S. technology as a vulnerability they have to mitigate.”