US, Allies Need Formal Chip Export Control System, Former BIS Official Says
The U.S. and its allies should establish a new multilateral export control system to prevent sensitive technologies from being sent to dangerous end-users, including those in China, said Rich Ashooh, a former senior U.S. export control official. Ashooh applauded American efforts so far and said it shouldn’t abandon the existing multilateral control regimes, but he said a more formal system is needed.
The U.S. should replace the “ad hoc approach currently utilized in the area of semiconductors” with “an agreed upon system among a smaller group of stakeholder nations that can act in concert,” Ashooh said during a House Financial Services Committee hearing and in written testimony this week. The U.S. has discussed a potential Chip 4 partnership with allies (see 2212280035 and 2210050009) -- which could increase coordination of semiconductor export controls -- and has worked in recent months to convince Japan, the Netherlands and other allies to increase chip restrictions on exports destined to China (see 2301270002). But the U.S. hasn’t yet moved to set up a new, formal regime as an alternative to the multilateral Wassenaar Arrangement, which includes Russia as a member.
Ashooh, the Bureau of Industry and Security's former assistant secretary for export administration, said the U.S. should set up a new regime that “can work with, but is separate from,” the existing ones. The existing regimes have “served the U.S. and partner nations well in the past, but [are] ill-suited for complex technology supply chains,” said Ashooh, vice president for global trade and government affairs with Lam Research Corp.
Former U.S. officials and technology experts have made similar arguments, saying Wassenaar isn’t built to adapt to modern export control concerns (see 2211210005). Other export control experts have said the U.S. should create a new multilateral regime with technology-producing nations that share democratic values (see 2205240039), and BIS has been exploring its own “multilateral export control framework,” but it remains unclear if the effort will result in any new, formal regimes (see 2206290032).
Ashooh stressed that a formal regime is necessary so the U.S. can address emerging export control issues “as the need arises” with allies that have a “full understanding of the nature of the technology involved,” rather than through bilateral meetings that may take more time. “High priority must be given to alignment with partner nations,” he said. “Without such alignment, unilateral policy will ultimately fail in combating both national security and economic threats from China.”
The U.S. can also pursue more multilateral export control coordination through G-7 meetings, which could “be more useful than the Wassenaar Arrangement,” Clete Willems, who was a National Security Council official during the Trump administration, said in written testimony to the committee. The U.S. also could propose an expansion to the G-7 to include Australia and South Korea as permanent members, said Willems, an Akin Gump lawyer. Others could be invited “on a select basis, such as Taiwan, for export control discussions,” he said.
Ashooh also pointed to what he said are “gaps” in existing export controls that the U.S. should look to address. “It is currently possible that export-controlled technology could be the beneficiary of U.S. financing -- intentionally or not,” he said. Although the U.S. is considering creating an outbound investment review mechanism to screen certain U.S. capital flows to China (see 2302070052), Ashooh suggested the gap “is one which could be addressed through alterations to current authorities.”
He pointed to a “recent enhancement” to the Export Administration Regulations that defines the term “support” by “U.S. persons” to include financing. “While further study must be conducted,” he said, “this feature of the law creates a regulatory ‘hook’ to limit financial activities already tied to restrictions based on export controls.”