US Should 'Tread Lightly' Around New Export Controls, Lawmaker Says

The U.S. may need to address export control loopholes to better prevent China and others from acquiring sensitive technologies, Sen. Mark Warner, D-Va., said, but he also cautioned the U.S. against imposing controls that are too broad and said they need to be coordinated with allies.

Warner, speaking during an event last week hosted by the German Marshall Fund, was asked whether the U.S. needs to better regulate certain activities by cloud providers, which are reportedly being used as a loophole by Chinese companies to acquire advanced semiconductors. The Bureau of Industry and Security has said it’s looking at ways to stop China from specifically using rental agreements with cloud providers to skirt the agency’s Oct. 7 export controls (see 2306200018, 2303210037 and 2305160092), although researchers have warned that BIS would face challenges implementing those controls multilaterally (see 2305160092).

“I do think one of the things that we've seen is that Russia or China and the ability to use the cloud to get around existing restrictions on transactions is something where there's a problem,” Warner said. “There are gaps around cloud.” He also noted there are “advocates around a broader-based export control system,” but cautioned the administration against expanding restrictions too much.

“I’m open” to more export controls, Warner said. “But I think we need to tread lightly. Some of those things -- I don't think you can cut off all exchange.” He said he recently met with EU officials “leading the regulatory effort there,” and said it’s “just gonna be a lot better if we could do this in concert.”

“I think there are a series of areas here where we need to sort this out,” Warner said about controls and other technology policy issues. “I'm not sure what the forum is.”

He also advocated for more regulations surrounding transactions with certain foreign technology companies, saying the Committee on Foreign Investment in the U.S. may not be sufficient. Warner and other lawmakers in March introduced the Restrict Act, which would give the administration new authority to block transactions with TikTok and other foreign technology products that threaten U.S. national security (see 2303070075).

“We've got a CFIUS process that frankly is OK, but it doesn't hit” every “required transaction,” Warner said. He added that the Restrict Act “gives Commerce a process. You’ve got to give the Russian Kaspersky company or the Chinese Huawei company or TikTok -- you’ve got to give them a day in court. There just needs to be a set of rules.”

He also said Congress and other institutions need to continue “educating” American and European businesses about risks associated with China. “Not that we need a decoupling,” he said, “but that we do need to start making these supply chains more secure,” especially if Chinese President Xi Jinping chooses to invade Taiwan, which would likely lead to a range of new Western sanctions against Beijing.

Warner said lawmakers recently held a classified meeting that included the CEO of a “Fortune 50” company, who was skeptical the invasion would occur. “They're going, ‘come on guys, you don't really think Xi’s going to do anything with Taiwan?’” Warner said. “And I'm going, 'what planet do you live on?'”

"l hope it doesn't happen. But if you don't have a plan B,” and if you don't think America and our friends will react if Xi starts sending artillery shells to [Russian President Vladimir] Putin,” Warner said, “then you're not a very good CEO, or you're not appropriately measuring business risk.”