Report Calls for New BIS Office to Study Impact of Export Controls

The U.S. should launch a new office within the Bureau of Industry and Security to measure the intended and unintended impacts of export controls on global supply chains before they are implemented, technology policy experts said in a new Atlantic Council report this week. This could help the U.S. better calibrate its trade restrictions so they don’t alienate allies and hurt American competitiveness, the report said, and could ultimately better convince trade partners to join in on the controls.

The report, by Atlantic Council nonresident fellow Emily Weinstein and senior fellow Peter Engelke, tackles how the U.S. should approach the technology race with China and offers a series of recommendations to policymakers. The report said the new BIS office could be similar to the recently established Sanctions Economic Analysis Unit within the Treasury Department, which is meant to measure the potential collateral damage of sanctions before they’re imposed.

Although “the US government has powerful protect measures at its disposal, implementing those measures often comes with a price, including friction with allies and partners,” the report said. The new office could measure the impacts of future export controls on allied and partner economies as well as on supply chains, the authors said, adding trade controls need to be “approached with a clear alignment between means and ends.”

Before deploying new export controls, the report said, it’s “critical” for policymakers to first identify how China is attempting to acquire foreign technology, “an evaluation that should allow the United States to hone more targeted controls that can yield intended results.” Export controls and other measures that are “too broad and ambiguous tend to backfire, as they create massive uncertainties that lead to overcompliance on the part of industry, in turn causing unintended downside consequences for economic competitiveness.”

The report pointed to the Biden administration’s October China chip restrictions (see 2210070049), which were “deemed necessary for geopolitical reasons” but also carry potential unintended consequences. “[L]imiting the ability of US companies like Nvidia, Applied Materials, KLA, and Lam Research to export their products and services to China, in addition to applying complex compliance burdens on these firms, has the potential to affect these firms’ ability to compete in the global semiconductor industry,” the report said.

Weinstein, who is also a research analyst at Georgetown University’s Center for Security and Emerging Technology, and Engelke also recommended the U.S. better “build out and sustain robust multilateral institutions” to implement trade controls. American policymakers should consider updating exciting multilateral forums “based on new realities,” the report said, including by creating a new multilateral export-control regime for the world’s “techno-democracies.”

But they also stressed that multilateral engagement needs to be sustained over many years in order to work. “[S]uccess will be determined by the degree to which senior policymakers can stay focused over the long run (i.e., across administrations) on this priority and in these multilateral forums.”