1、Optimizing Export Controls for Critical and Emerging TechnologiesReviewing Control Lists,Expanded Rules,and Covered ItemsAUTHORSWilliam A.ReinschThibault DenamielEric MeyersOCTOBER 2023A Report of the CSIS Scholl Chair in International BusinessOptimizing Export Controls for Critical and Emerging Tec

2、hnologiesReviewing Control Lists,Expanded Rules,and Covered ItemsAUTHORSWilliam A.ReinschThibault DenamielEric MeyersOCTOBER 2023A Report of the CSIS Scholl Chair in International BusinessII|Optimizing Export Controls for Critical and Emerging TechnologiesAbout CSIS The Center for Strategic and Inte

3、rnational Studies(CSIS)is a bipartisan,nonprofit policy research organization dedicated to advancing practical ideas to address the worlds greatest challenges.Thomas J.Pritzker was named chairman of the CSIS Board of Trustees in 2015,succeeding former U.S.senator Sam Nunn(D-GA).Founded in 1962,CSIS

4、is led by John J.Hamre,who has served as president and chief executive officer since 2000.CSISs purpose is to define the future of national security.We are guided by a distinct set of valuesnonpartisanship,independent thought,innovative thinking,cross-disciplinary scholarship,integrity and professio

5、nalism,and talent development.CSISs values work in concert toward the goal of making real-world impact.CSIS scholars bring their policy expertise,judgment,and robust networks to their research,analysis,and recommendations.We organize conferences,publish,lecture,and make media appearances that aim to

6、 increase the knowledge,awareness,and salience of policy issues with relevant stakeholders and the interested public.CSIS has impact when our research helps to inform the decisionmaking of key policymakers and the thinking of key influencers.We work toward a vision of a safer and more prosperous wor

7、ld.CSIS does not take specific policy positions;accordingly,all views expressed herein should be understood to be solely those of the author(s).2023 by the Center for Strategic and International Studies.All rights reserved.Center for Strategic&International Studies1616 Rhode Island Avenue,NWWashingt

8、on,DC 20036202-887-0200|www.csis.orgIII|William A.Reinsch,Thibault Denamiel,and Eric MeyersAcknowledgmentsThis report is made possible through generous support from the Smith Richardson Foundation.The authors would like to thank Scholl Chair colleague Hannah Grothusen as well as interns Emilie Kerst

9、ens and Joyce Bongongo for their research assistance throughout this project.IV|Optimizing Export Controls for Critical and Emerging TechnologiesContentsIntroduction 1Bureau of Industry and Security 4Current Capabilities 4Tools 5Entity List 7Country Listings 10Foreign Direct Product Rules 14Catch-Al

10、l Controls 18Denied Persons List(DPL)20Unverified List(UVL)20Military End-User(UVL)21Reexamining the Commerce Control List 22CCL Framework 22Explanation of the Framework 23Role of Multilateral Export Control Regimes 24Commerce Control List Items 27Items to Decontrol 27Items to Review 28Unmanned Aeri

11、al Vehicles(UAVs)30Field Programmable Gate Arrays(FPGAs)31Radiation-Hardened Electronic Components 32Machine Tools 33Lasers 34Advanced Materials:Polyimides 35V|Optimizing Export Controls for Critical and Emerging TechnologiesTesting Equipment:Aircraft Engines 36Policy Recommendations 381.Revise BIS

12、Lists to Better Tackle Todays Security Challenges 382.Undertake a Comprehensive Review of CCL Items 39Items to Decontrol 39Items to Review 39Conclusion 41About the Authors 43Endnotes 451|William A.Reinsch,Thibault Denamiel,and Eric MeyersIntroductionHe who defends everything defends nothing.Frederic

13、k the GreatNational security threats are once again evolving as the United States finds itself involved in new forms of great-power competition.Economic prosperity and geostrategy,once distinct,now go hand in hand to fully respond to todays challenges.That reality is compounded by rapid advances in

14、technology,which demand swift and adaptable policy responses.As a result,the U.S.approach to export controls on dual-use items is undergoing a paradigm shift.Critical and emerging technologies such as quantum technologies,semiconductors,artificial intelligence(AI),and biotechnology,along with transf

15、ers of intangible assets around the globe,are now front and center in U.S.-China competition.New policies designed to control these kinds of technologies have become a cornerstone of the U.S.national security strategy.This movement has led to several recent developments aiming to curb access for cou

16、ntries of concern to resources that would enhance their capabilities in critical sectors.The best examples are the October 7,2022,export controls targeting chips and semiconductor manufacturing equipment and recent efforts to close loopholes resulting from these new rules.Focus on critical and emerg

17、ing technologies role in the conflation of national security and economic policy has produced an executive order on outbound investment,setting up a notification process and selected bans on U.S.investments in China in semiconductors,quantum technologies,and AI.The United States has also been expand

18、ing controls curbing other sectors of the economy.In August 2023,the Department of Commerces Bureau of Industry and Security(BIS),along with the 2|Optimizing Export Controls for Critical and Emerging TechnologiesNuclear Regulatory Commission(NRC),restricted U.S.exporters ability to sell nuclear mate

19、rials to China and Macau.1 In addition,the new rule subjected China to a licensing requirement for unilateral controls on dual-use nuclear goods that fall outside the scope of Nuclear Suppliers Group agreements.The NRC,in turn,suspended a general license to export special nuclear material,source mat

20、erial,and deuterium for nuclear end use to China.The previous report of this yearlong project on Maintaining U.S.Superiority through New Technology Transfers Frameworks outlined a path forward for U.S.policymakers regarding the most prominent types of emerging technologies that will shape the econom

21、ic and security landscape of the twenty-first century.2 That report noted that while the new controls may be justified on national security grounds,they will also cause revenue burdens on U.S.companies and pose processing and enforcement challenges for BIS.These consequences will prove detrimental t

22、o the long-term security of the United States,as they will hinder the countrys ability to run faster and implement controls effectively.The Center for Strategic and International Studies(CSIS)has already covered some steps that should be taken to tackle these issues,3 such as helping domestic indust

23、ry and allied economies run faster by ensuring consistent and sufficient government support.Likewise,institutionalizing better communications with the private sector would better inform the U.S.government about industry concerns and new developments.However,the policy shift regarding these critical

24、technologies must also spur a rethinking of controls on more traditional dual-use items on the Commerce Control List(CCL)with both commercial and defense applications.Some items on the CCL merit review and,potentially,decontrol.As the nature of critical U.S.threats changes,the items that need to be

25、restricted according to their level of sophistication also evolves.Manufacturing capabilities in countries of concern have progressed significantly,and security in terms of export controls is defined at the margins of technological advancement rather than by legacy items already within reach of pote

26、ntial adversaries technical capacity.In short,an expansion of controls at the high end of technological advancements demands adjustments at the low end.This report examines items on the CCL outside the scope of those discussed in the previous paper and provides a framework to recalibrate the current

27、 approach in accordance with new U.S.security imperatives.4 The report first outlines the major lists that underlie the U.S.export controls regime,such as entity lists and country lists.It shows how their recent expansion has made implementation and enforcement of controls more challenging by broade

28、ning the responsibilities of BIS.Further,it suggests ways to rethink administering the lists.It then turns to the CCL and provides an analytic framework for reviewing items on it.The report follows with examples of items that could undergo review in accordance with the new emphasis on critical and e

29、merging technologies,allied nations positions on controlling these items,and the ability of countries of concern to manufacture them without U.S.and partner inputs.Lastly,it offers recommendations for BIS officials to adapt the CCL,as well as the multiplicity of lists,to the current national securit

30、y threat environment.An expansion of controls at the high end of technological advancements demands adjustments at the low end.3|William A.Reinsch,Thibault Denamiel,and Eric MeyersThis report is followed by the projects third element,which will examine foreign availability of the emerging technologi

31、es outlined in the first paper and lay out steps to better enhance multilateral export control regimes.It will also discuss current frameworks for controlling dual-use items multilaterally and present alternatives to make up for the current mechanisms shortcomings.4|Optimizing Export Controls for Cr

32、itical and Emerging TechnologiesBureau of Industry and SecurityCentral to the conversation around the CCLs scope are the capabilities of the agency administering and enforcing it.As the United States continues to explore ways to limit the access of countries of concern to homegrown technology,streng

33、thening BIS remains a cornerstone for control considerations.While BIS has grown in the past few years,it is still facing an uphill battle to obtain the resources it needs to best serve U.S.national security and foreign policy interests.Current CapabilitiesBIS has already expanded its capabilities t

34、o match the larger scope of its activities.In fiscal year(FY)2023,its enacted budget was$191 million,5 an increase of$50 million over the previous year.Nevertheless,the agency is asking for further expansion:for 2024,BIS has requested a discretionary spending appropriation of$222.4 million and an ex

35、pansion of its staffing from 554 positions in 2023 to 587 positions for next year.6 Years of underinvestment have hampered BIS processing and enforcement capabilities,7 especially given the major additional burden of preventing export control evasion from Russia and China.Current and former staff me

36、mbers have complained that the databases used to monitor trade flows and identify suspicious activity routinely crash and have only a fraction of the necessary functionality.8 In FY 2022,BIS processed 40,765 license applications in an average time of 40 days.9 While this was only a slight decrease f

37、rom the 41,201 applications processed in 2021,the average processing time in 2021 was significantly lower at 26 days.10Obtaining licenses to export to the Chinese marketone of the chief sources of revenue for many U.S.firmsis increasingly becoming a time-intensive process.Under Secretary of Commerce

38、 for 5|William A.Reinsch,Thibault Denamiel,and Eric MeyersIndustry and Security Alan F.Estevez stated this year that license applications for China have an average processing time of 77 days,much longer than the average 40 days for other cases.11 ToolsThe U.S.government lists and rules previewed in

39、the below text box aim to prevent items,software,and technology under U.S.jurisdiction from supporting end uses and users that pose a risk to U.S.national security and foreign policy interests.This tool kit has expanded as the United States has increasingly adopted a policy of curbing adversaries ac

40、cess not only to homegrown technologies but also to those manufactured in allied and partner nations.Therefore,these lists and rules could better reflect shifting U.S.security interests by undergoing a general review that streamlines and updates them to alleviate BIS processing and enforcement burde

41、ns to best serve U.S.national security goals.WHAT IS SUBJECT TO THE EXPORT ADMINISTRATION REGULATIONS(EAR)?All items in the United States,in U.S foreign trade zones,and in transit through the United States from one foreign country to another are subject to the EAR.12 Moreover,there are three other c

42、hief criteria informing whether the EAR will cover an item,regardless of whether a U.S.person exports it or a foreign entity reexports or transfers it in country:131.All U.S.-origin items are subject to the EAR no matter where they are located.142.Foreign-made items,software,and technology that“inco

43、rporate.are bundled.or are commingled”with controlled U.S.content and would otherwise require a license to the proposed end destination are subject to the EAR:In any quantity if they meet certain conditions 734.4(a)of the EAR sets forth.By way of illustration,not limitation,the EAR thus prohibits th

44、e export of any of the following items regardless of their quantity:designated“foreign-made computers.with U.S.-origin controlled semiconductors”;“foreign produced encryption technology that incorporates U.S.origin encryption technology”;specified“foreign-made military commodities”;denominated items

45、“supporting the proliferation of weapons of mass-destruction”;or items to be exported to certain foreign countries of concern.In quantities above the de minimis threshold,which,depending on the country of final destination,involves more than 10 or 25 percent of U.S.-origin controlled content by valu

46、e.When a foreign-made item includes more than 25 percent worth of U.S.-controlled content,it is subject to the EAR no matter where it is reexported abroad.When a foreign-made item includes between 10 and 25 percent of U.S.-controlled content,it is subject to the EAR when destined abroad to Country G

47、roups E:1 or E:2namely,Cuba,Iran,North Korea,or Syria.6|Optimizing Export Controls for Critical and Emerging Technologies3.Foreign-made items deemed to be directly produced as a result of foreign access to specific U.S.-origin equipment,software,or technology are subject to the EAR when bound for ce

48、rtain destinations(Foreign Direct Product FDP rules).Exports include the shipment,downloading,or transmission of items out of the United States.Reexports involve the export of items from one foreign country to another.In-country transfers entail shipment,transmission,or release of items subject to t

49、he EAR between foreign persons or entities within the same foreign country.7|William A.Reinsch,Thibault Denamiel,and Eric MeyersEntity ListFirst published in 1997,the Entity List subjects U.S.persons to license requirements for the export,reexport,and in-country transfer of goods,software,and techno

50、logy to select foreign entities.15 The Entity List initially sought to prevent Americans from conducting activities at risk of enhancing weapon of mass destruction(WMD)programs abroad,16 but it has since evolved to target foreign entities threatening U.S.national security and foreign policy interest

51、s as well.As charted in supplement 4 to part 744 of the EAR,applications for exports to entities on the list are subject to specific license review.These license applications typically are subjectin descending order of restrictivenessto a“policy of denial,”“presumption of denial,”or“case-by-case”rev

52、iew.17 Thus,BIS approves licenses subject to a policy of denial“only in exceptional circumstances,”while a presumption of denial policy presumes BIS will reject a license application if it is evident the transaction will not damage U.S.security interests.18 Case-by-case reviews rely on analyzing the

53、 facts unique to a specific application.19An interagency End-User Review Committee(ERC)with a Department of Commerce chair reviews any proposed changes to the Entity List.20 With representatives from the Departments of Defense,Energy,State,and,when appropriate,the Treasury,the ERC has the authority

54、to recommend updates to the Entity List on an ad hoc basis.Irrespective of any ad hoc adjustments,though,the ERC must annually assess the list for updates to include not only additions but also removals.21 The former necessitates a majority vote while the latter requires a unanimous decision.The Ent

55、ity List is distinct from other U.S.government lists and is regulated under a different authority.22 Hence,the Department of Treasurys Specially Designated Nationals and Blocked Persons List and the Department of States Debarred Parties List,among others,serve different objectives 8|Optimizing Expor

56、t Controls for Critical and Emerging Technologiesthan the Entity List.BIS also maintains three other lists:the Denied Persons List,the Military End User List,and the Unverified List.Described in more detail later in this report,the Denied Persons List identifies individuals and entities denied expor

57、t and reexport privileges.The Military End User List pinpoints parties deemed to represent an unacceptable risk of diversion to certain chemical and biological,military intelligence,missile,and nuclear end users in countries such as China,Russia,and Venezuela.The Unverified List records end users wh

58、o fail to cooperate with BIS during post-shipment verification checks.Should a foreign entity on the Unverified List neglect satisfying these checks within 60 days,BIS will transfer it to the Entity List.23The Entity Lists function expanded in 2008 when BIS augmented the Entity Lists mission from sp

59、ecifically countering foreign WMD programs to combating broader foreign threats to U.S.national security and foreign policy.24 This policy further expanded around 2014 when the geographical concentration of newly blacklisted entities transitioned from those based in the Middle East and South Asia to

60、 those headquartered in China and Russia.25 As a result,the Entity List has changed to reflect the dynamically evolving threat landscapes facing the United States today in an increasingly multipolar world with a resurgent Russia and a rising China.Consequently,BIS has ramped up its targeting of firm

61、s supporting Chinese intelligence,military,and nuclear programs just as it has blacklisted foreign entities aiding Russias war against Ukraine.26 These targets indicate U.S.readiness to stem countries of concerns access to dual-use technologies,particularly those supporting development of critical a

62、nd emerging technology sectors such as AI,quantum computing,and semiconductors.27 Moreover,these targeted but far-reaching rules point toward a U.S.foreign policy increasingly set on choking off adversarial access to technology Washington views as critical to national security,even at the cost of do

63、mestic economic benefit.28 Washingtons geostrategic shift in export control policy has also resulted in an ongoing boom in the size of the Entity List,which has grown over 35 percent since 2018 and is now the U.S.governments second-largest export screening list behind the Department of Treasurys Spe

64、cially Designated Nationals and Blocked Persons List.29 Under the administration of President Joseph Biden,BIS has added over 200 Chinese entities to its blacklist of now nearly 700 firms.According to the Department of Commerce assistant secretary for export control administration,BIS has done so to

65、 counteract foreign entities from“supporting Chinas military modernization and WMD programs,supporting Irans WMD and military programs,facilitating human rights abuses in Xinjiang,and providing restricted items to Russia.”30In March 2023,BIS released data breaking down its response to license reques

66、ts from Chinese firms on the Entity List from January 3 through March 31,2022.31 The licensing data reveal that during this period BIS approved 192 of 242 total license applications from blacklisted Chinese companies,accounting for$23 billion in permitted transactions.Of the approved licenses,115 in

67、volved unspecified export-controlled technologies.In turn,BIS denied 19 licenses worth roughly$5 billion and returned 31 applications worth nearly$1 billion without action.In October 2021 the House Foreign Affairs Committee released more granular licensing data from BIS regarding U.S.business activi

68、ty with entity-listed Chinese companies Huawei and Semiconductor Manufacturing International Corporation(SMIC)from November 9,2020,through April 20,2021.32 Most of the license applications involved requests for electronics such as semiconductors.33 BIS approved 113 licenses,worth$61.4 billion,for Hu

69、awei and 188 licenses,worth 9|William A.Reinsch,Thibault Denamiel,and Eric Meyers$41.9 billion,for SMIC.BIS returned without action 48 license requests,worth$29.8 billion,to Huawei as well as 17 licenses,worth$1.2 billion,to SMIC.34Although the Entity List has significantly expanded in recent years,

70、the ERC since 2008 has removed only about seven entities from the list annually.35 According to the same information,the ERC apparently has not conducted its mandated annual review weighing potential Entity List removals since 2013.Coupled with this apparent absence of oversight,the vast disparity b

71、etween blacklist additions and removals begs the question whether the ERC is so focused on expansion that it has disregarded removing now-obsolete foreign entities from the Entity List.These issues also raise the question of whether the ERC has sufficient workforce to implement its powers successful

72、ly.The Entity Lists significant expansion reflects Chinas growing capabilities when it comes to national securityrelated technologies.Chinas growth may be inevitable but may be delayed as the United States seeks to control development of critical and emerging capabilities such as AI and quantum tech

73、nologies.Nevertheless,BIS can take more proactive steps to ensure the Entity List is as tight as possible by removing entities that no longer present clear and evident threats to U.S.national security.10|Optimizing Export Controls for Critical and Emerging TechnologiesCountry Listings The U.S.govern

74、ment maintains multiple formal and informal country lists identifying economic measures that impose trade controls and sanctions against designated foreign countries.Examples of this practice include the Department of States list of policies inhibiting the access of select foreign countries to U.S.d

75、efense articles and services,36 the Department of Treasurys combined list that tracks both the targeted and broad foreign country-level sanctions it administers,37 and the Department of Commerces lists supporting U.S.export administration,such as the Commerce Country Chart(CCC),the list of country g

76、roups,and those related to comprehensive controls subjecting certain foreign countries to far-reaching license requirements.These lists thus serve different purposes but ultimately share the overarching aim of promoting U.S.security interests abroad.The Department of State list bars the sale of cert

77、ain military technology and technical data to countries including Afghanistan,Belarus,Myanmar,Cambodia,the Central African Republic,China,Cuba,Cyprus,Democratic Republic of Congo,Eritrea,Ethiopia,Haiti,Iran,Iraq,Kyrgyzstan,Lebanon,Libya,North Korea,Russia,Somalia,South Sudan,Sudan,Syria,Venezuela,an

78、d Zimbabwe.38 The Department of Treasurys Office of Foreign Assets Control(OFAC)oversees comprehensive economic and trade sanctions against Cuba,Iran,North Korea,and Syria as well as Russia,Belarus,the occupied Crimea region of Ukraine,the Donetsk Peoples Republic(DNR),and the Luhansk Peoples Republ

79、ic(LNR).39 OFAC stresses it“does not maintain a specific list of countries that U.S.persons cannot do business with,”as its sanction packages vary significantly in scope.40 As a result,OFAC manages sanctions involving several other foreign countries,but these target specific individuals and entities

80、 within those countries with the aim of,for example,countering terrorism and narcotics.The Department of Commerce likewise implements comprehensive controls against Cuba,Iran,and Syria,41 just as it supplements UN Security Council arms embargoes curbing the Central African 11|William A.Reinsch,Thiba

81、ult Denamiel,and Eric MeyersRepublic,Democratic Republic of Congo,Eritrea,Iran,Iraq,Lebanon,Libya,North Korea,Somalia,and Sudan.42 Moreover,to complement OFACs sanctions designed to impede Russias war against Ukraine,the Department of Commerce has levied extensive export controls against Russia and

82、Belarus as well as occupied Crimea,the DNR,and the LNR.43Charted in supplement 1 to part 738 of the EAR,the Department of Commerces CCC seeks to help U.S.persons understand country-specific license requirements for items on the CCL.44 The CCC,which encompasses all foreign countries ranging from Afgh

83、anistan to Zimbabwe,aims to help the public more easily decide whether it must submit a license application to BIS for approval to export items on the CCL to certain countries.45 Various multilateral and unilateral reasons for control inform BIS license application reviews.Multilateral reasons for c

84、ontrol include those related to chemical and biological weapons(CB),nuclear nonproliferation(NP),national security(NS),and missile technology(MT),whereas unilateral reasons for control include those related to regional stability(RS),crime control(CC),and antiterrorism(AT).46 Unilateral reasons for c

85、ontrol also include exports of firearms to Organization of American States member countries(FC)and embargoes set forth by the United Nations.The CCC specifically demarcates country-by-country license requirements according to CB,NP,NS,MT,RS,FC,CC,and AT reasons for control.47 According to the EAR,ea

86、ch of these reasons for control serves a different purpose,as shown in Table 1.Table 1:Control Designations and Their Purpose under the EARControl designationAbbreviationPurposeChemical and biological weapons(CBWs)CBThwart“the proliferation and illegal use”of CBWsNuclear nonproliferationNPEngage in

87、nuclear weapons counterproliferationNational securityNSSafeguard U.S.national security by preventing“significant contribution to the military potential of any other country or combination of countries”Missile technologyMTCounter missile proliferation,including the“design,develop-ment,production,or u

88、se”of missilesRegional stabilityRSRegulate exports that could“contribute directly or indirectly to any countrys military capabilities in a manner that would alter or destabilize a regions military balance”against U.S.interestsFirearms conventionFC“Combat illicit manufacturing of and trafficking in f

89、irearms,ammunition,explosives,and other related materials in North and South America because of their links to such activities as drug trafficking,terrorism,and transnational organized crime”Crime controlCC“Promote the observance of human rights”worldwideAntiterrorismATPrevent countries such as Iran

90、,Syria,and North Korea from supporting global terrorism.Source:Commerce Control List Overview and the Country Chart,15 C.F.R.738 Supp.1(2023),https:/www.bis.doc.gov/index.php/documents/regulations-docs/federal-register-notices/federal-register-2014/1033-738-supp-1/file.12|Optimizing Export Controls

91、for Critical and Emerging TechnologiesAs laid out in supplement 1 to part 740 of the EAR,the Department of Commerce complements the CCC by sorting countries across the globe into country groups reflecting each countrys domestic export control policies and membership in multilateral regimes.48 These

92、groupings may also be used when describing license review policy and end-user and end-use based controls under part 774,thereby helping inform U.S.persons whether their proposed export is subject to a license exception.49 There are five total country groups,in order of least to most restrictive lice

93、nse requirements:501.Group A contains countries participating in multilateral agreements with the United States.It has six subgroups,four of which are divided according to a countrys membershipor lack thereofin the Australia Group,the Missile Technology Control Regime(excluding Russia),the Nuclear S

94、uppliers Group(excluding Belarus,China,and Russia),or the Wassenaar Arrangement(excluding Malta,Russia,and Ukraine).The fifth and sixth subgroups chart countries benefiting from license exceptions because of strategic trade authorization.2.Group B incorporates most of the United States biggest trade

95、 partners and involves countries that typically have export license exceptions.Notable exceptions from Group B include China and Vietnam.3.Group C is“reserved”from public viewing.4.Group D has five subgroups,four of which are categorized according to respective national security,nuclear,chemical and

96、 biological,and missile technology concerns.The fifth subgroup encompasses all countries subject to arms bans the Department of State has set forth.Because Group D countries fit these enhanced risk categorizations,exports to them necessitate greater license requirements compared to the above-referen

97、ced groups.5.Group E is divided into two subgroups.The first recognizes Iran,North Korea,and Syria as countries supporting terrorism.The second subgroup identifies Cuba as subject to a unilateral embargo from the United States.In January 2023,the Biden administrations BIS provided an interim rule up

98、date to the EAR incorporating sweeping export controls designed to stymie Beijings military,nuclear,and security programs.51 Within that rule change,BIS outlined wide-ranging updates to the reasons for control regarding goods,technology,and software on the CCL related to sectors such as AI and advan

99、ced integrated circuits.These changes resulted in new license requirements reflected in updates to the CCC.Moreover,after Russias further invasion of Ukraine,the BIS amended the EAR in March 2022 to adjust,among other things,certain CCC-relevant license requirements for Russia,just as it added Russi

100、a to the Group D subdivision of foreign countries facing the Department of State arms embargoes.52 This March 2022 amendment scaffolded upon BISs decision two years earlier to remove Russia from the Group A subgroups concerning the Missile Technology Control Regime and the Nuclear Suppliers Group,de

101、spite Russias membership in both arrangements.Recent BIS updates show that changes in country listings are already underway to reflect the changing security environment more accurately.For instance,after including Hong Kong under the same CCC entry as China in 2020,53 BIS should do the same with Mac

102、au;such an inclusion would be in line with the recent outbound investment screening executive order.However,countries of growing geopolitical importance,given their proximity and relationship to countries of concern,with which the United States should pursue closer security tiessuch as Moldova and V

103、ietnam13|William A.Reinsch,Thibault Denamiel,and Eric Meyerscould be reviewed and potentially receive preferential status.Such nations could undergo,for instance,a transition similar to that of Ukraine and be upgraded to Country Group B.14|Optimizing Export Controls for Critical and Emerging Technol

104、ogiesForeign Direct Product RulesFrom its inception,U.S.export control laws have been applied extraterritorially.The most recent example is the expansion of the Foreign Direct Product(FDP)rules.As described,the EARthrough its FDP rulesapplies to foreign-made items when they are the direct product of

105、 certain types of U.S.-origin equipment,software,or technology and are destined for designated countries abroad.54 Formed initially as a single rule in 195955 within a Cold War context,56 the list of FDP rules has grown since 2013,now regulating an expanded scope of exports,reexports,and transfers o

106、f items that foreign countries have produced because of their access to U.S.-origin goods.There are now nine FDP rules,as outlined in Table 2.57Table 2:The FDP RulesFDP ruleDestination scopeProduct scopeThe National Security FDP rule,an updated 1996 version of the origi-nal FDP rule,58 stipulates th

107、at a foreign-produced item is subject to the EAR based on the fol-lowing criteria.Destined for end use in Country Groups D:1,E:1,or E:2Subject to the CCLs NS reason for control,59 which includes items from the Was-senaar Arrangements List of Dual-Use Goods and Technol-ogies and Munitions ListA direc

108、t product of either U.S.-origin technology or software or a direct product of a complete plant or major component of a plant that it-self is a direct product requir-ing written assurance for a license or license exception60The 9x515 FDP rule,created in 2014,61 subjects a foreign-pro-duced commercial

109、 sat-ellite-or space-related item to the EAR based on the following criteria.62Destined for end use in Country Groups D:5,E:1,or E:2Subject to a 9x515 Export Control Classification Number(ECCN)on the CLA direct product of either U.S.-origin technology or software or a direct product of a complete pl

110、ant or major component of a plant that itself is a direct product of U.S.-made technology as set forth in ECCN 9D515 or 9E515 of the CCL15|William A.Reinsch,Thibault Denamiel,and Eric MeyersThe“600 Series”FDP rule,proposed in 2013,63 employs the EAR against a certain foreign-produced mili-tary item

111、based on the following criteria.64Destined for end use in Country Groups D:1,D:3,D:4,D:5,E:1,or E:2Subject to either ECCN 0A919 or a“600 series”ECCN on the CCL65 A direct product of either U.S.-origin technology or soft-ware or a direct product of a complete plant or major com-ponent of a plant that

112、 itself is a direct product of U.S.-made technology subject to a“600 series”ECCN on the CCLThe Entity List FDP rule,announced in 2020,66 leverages the Entity List to make a foreign-produced item subject to the EAR based on the following criteria.Destined for transac-tions involving or use by certain

113、 end users indicated on the U.S.Entity ListN/AA direct product of either U.S.-origin technology or soft-ware or a direct product of a complete plant or major com-ponent of a plant that itself is a direct product of U.S.-made technology subject to certain ECCNs on the CCLRussia/Belarus/Tempo-rarily O

114、ccupied Crimea Region of Ukraine FDP Rule,15 C.F.R.734.9(f)(2023),first implement-ed less than a day after Russias invasion of Ukraine in 2022 and expanded in 2023,67 sub-jects a foreign-produced item to the EAR based on the following criteria.Destined for end use in Russia,Belarus,or temporarily oc

115、cu-pied Crimea Subject to any ECCN on the CCL or specified in supple-ment 6 or 7 to part 746 of the EAR68A direct product of either U.S.-origin technology or soft-ware or a direct product of a complete plant or major com-ponent of a plant that itself is a direct product of U.S.-made technology subje

116、ct to any ECCN in product groups D or E of any CCL categoryThe Russia/Belar-us-Military End User FDP rule,also released in 2022 in response to Russias invasion of Ukraine,69 allows the EAR to regulate a foreign-produced item based on the fol-lowing criteria.70Destined for transac-tions involving or

117、use by certain end users indicated on the U.S.Entity ListN/AA direct product of either U.S.-origin technology or soft-ware or a direct product of a complete plant or major com-ponent of a plant that itself is a direct product of U.S.-made technology subject to any ECCN in product groups D or E of an

118、y CCL categoryThe Advanced Comput-ing FDP rule,unveiled in October 2022,71 subjects a foreign-produced computing-related item to the EAR based on the following criteria.72Destined for China or Macau,incorporat-ed into any non-EAR99 item headed to China or Macau,or developed by a China-based entity t

119、o facilitate producing a mask or integrated circuit wafer or dieSubject to select ECCNs on the CCL or is an integrated circuit,computer,electron-ic assembly,or component specified elsewhere on the CCL meeting certain perfor-mance thresholdsA direct product of either U.S.-origin technology or softwar

120、e or a direct product of a complete plant or major component of a plant that itself is a direct product of certain U.S.-made technology subject to different ECCNs on the CCLThe“Supercomputer”FDP rule,also put into effect in October 2022,73 subjects a foreign-produced supercomputing-related item to t

121、he EAR based on the following criteria.74Destined for end use that enables Chi-na-or Macau-based high-performance computing(i.e.,supercomputers)N/AA direct product of either U.S.-origin technology or soft-ware or a direct product of a complete plant or major com-ponent of a plant that itself is a di

122、rect product of certain U.S.-made technology subject to different ECCNs on the CCL focused on supercomputer development and upkeepThe Iran FDP rule,issued in February 2023,75 requires a foreign-produced item be subject to the EAR based on the following criteria.Destined for end use in IranSubject to

123、 any ECCN in Cate-gories 35 or 7 of the CCL or specified in supplement 7 to part 746 of the EAR76A direct product of either U.S.-origin technology or software or a direct product of a complete plant or major component of a plant that itself is a“direct product”of U.S.-made technology or software sub

124、ject to any ECCN in product groups D or E in Categories 35 or 7 of the CCL16|Optimizing Export Controls for Critical and Emerging TechnologiesThese rules have evolved as the United States transitioned from the Trump to the Biden administration.A case in point involves the Entity List FDP rule,which

125、the Trump administration introduced in late 2020 to throttle the growth of Huawei and its affiliates by restricting their access to certain foreign-produced items.77 For example,the administration took advantage of Taiwan Semiconductor Manufacturing Companys reliance on U.S.semiconductor manufacturi

126、ng equipment to restrict the Taiwanese companys sale of industry-leading chips to Huawei and its partners.Just as the Trump administration used the Entity List FDP rule to combat Chinese threats to U.S.national security,so too did the Biden administration when it expanded that rule to include not on

127、ly Huawei and its affiliates but also China-based entities supporting Chinas intelligence,military,and nuclear programs.78 Together with the Entity List FDP rule expansion,Bidens BIS in October 2022 implemented sweeping advanced computing and supercomputer FDP rules to promote the administrations“sm

128、all yard,high fence”strategy of shielding technology sectors such as AI,advanced chips and microelectronics,and high-performance computing from China.79 Even so,the Biden administration first marked its readiness to use FDP rules against countries of concern when it,together with U.S.allies and part

129、ners,formulated unprecedented export controls against Russia.80 Immediately after Russias 2022 invasion of Ukraine,BIS devised two new FDP rules to stifle the ambitions of Russias defense-industrial base to help Moscow win the war.81 In February 2023,the Biden administration took its Russia-related

130、FDP rules a step further by creating an Iran FDP rule designed to disrupt Irans supply to Russia of unmanned aerial vehicles that aim to enrich Russias war machine and help it achieve its military goals in Ukraine.Increasing U.S.reliance on FDP rules to enforce export curbs represents another way th

131、e United States has significantly expanded controls to address growing security challenges from countries of concern.However,use of these FDP rules may stretch enforcement capabilities thin,making BIS efforts less effective.Before Washington continues to expand these rules to rein in the access of c

132、ountries of concern to emerging technologies,U.S.policymakers should carefully consider the governments ability to enforce them,particularly against lower-priority threats.Although the U.S.government has sometimes employed FDP rules to prevent its export controls from undercutting domestic businesse

133、s,taking advantage of these rules to stem the sale of foreign-made technology carries important risks that Washington should consider.82 On the one hand,as assistant secretary of commerce for export administration during the Obama administration Kevin Wolf argues,some allies share the same export co

134、ntrol policy concerns as those of Washington but lack“the legal authority or the political will”to impose comparable controls.83 As a result,according to Wolf,these countries“love”Washingtons implementation of FDP rules because they do not have a domestic alternative.On the other hand,other countrie

135、s,including“good allies,”quietly“bristle”at the“extraterritorial jurisdiction of US law over their companies”via FDP rules.84 Thus,if the United States continues exploiting the extraterritorial nature of FDP rules to block industries abroad from trading with actors of concern,it risks bullying some

136、allies and foreign partners into compliance by compelling their private sector to either adhere to U.S.export controls or face the consequences.85 This threat appears credible after the U.S.government imposed a$300 million fine against data storage company Seagate for noncompliance with the Entity L

137、ist FDP rule when it supplied Huawei without BIS license authorization.86 17|William A.Reinsch,Thibault Denamiel,and Eric MeyersRelying on FDP rules to serve as all-encompassing national security tools risks pushing industries in U.S.allied and partner nations toward devising pathways to design out

138、U.S.technology from their supply chains.When it comes to semiconductors,for instance,China has explored several avenues:one such design-out pathway China is pursuing leverages advanced packaging techniques to develop chiplets,which may offer a route to producing high-performance chips independent of

139、 a diminishingly effective Moores Law that requires astronomical investment in equipment to produce smaller chips.87 Moreover,China is embracing complementary efforts to circumvent U.S.-led export controls by investing heavily in open-source chip software such as RISC-V.88 Beijing has thus taken ste

140、ps to replace industry-leading Western chip design software,such as offered by Intel and UK-based Arm,with alternatives not subject to U.S.export curbs.89 Chinese firms have encountered some success designing out U.S.inputs.For instance,Wuhan Huagong Laser Engineering,a subsidiary of Shenzhen-listed

141、 HGTECH Group,has produced Chinas first high-end wafer laser cutting equipment with fully localized core components.90 Likewise,Chinese equipment companies that are direct competitors of U.S.champions are gaining a larger share of the semiconductor manufacturing equipment.91Although design-out effor

142、ts primarily appear,so far,to originate from China and face significant financial and technical barriers in other countries,this policy trend may expose the United States to medium-and long-term vulnerabilities that threaten to undercut U.S.innovation,diminish U.S.alignment with allies and partners

143、on high technology,and propel Chinas technological ambitions.92 18|Optimizing Export Controls for Critical and Emerging TechnologiesCatch-All ControlsWhile U.S.export control lists precisely identify items,technology,and software subject to licensing requirements,catch-all controls offer a much broa

144、der instrument of control that can cover items outside normal licensing processes.93 Thus,catch-all controls subject the export,reexport,and in-country transfer of unlisted items(those not on any export control list)to license requirements if they are destined for specific end users or end uses.With

145、in the scope of catch-all controls,therefore,are EAR99 items(those not on the CCL but still subject to the EAR).94As summarized in part 744 of the EAR,95 catch-all controls seek to regulate the sale of items that could facilitate certain chemical and biological weapon,missile proliferation,and nucle

146、ar end uses of concern.96 As a result,catch-all controls create the capacity to block bad actors access to unlisted items when the U.S.government or industry has knowledge or reason to suspect an export will enable the above-described end uses of concern.97 Hence,the United States views catch-all co

147、ntrols as a tool to counter bad actors ability to accomplish the following:981.Exploit the relative ease of acquiring unlisted dual-use items.2.Substitute listed items with alternatives having comparable performance capabilities just below export control thresholds.3.Use unlisted items to develop in

148、digenous capacities to produce related restricted items.4.Modify unlisted items to match the performance of comparable export-controlled items.Although the United States was the first country to devise catch-all controls in 1990,this application of export controls has since caught on worldwide among

149、 most developed countries.99 Notably,19|William A.Reinsch,Thibault Denamiel,and Eric Meyersall the chief multilateral export control regimesthe Australia Group(as of 2002),the Missile Technology Control Regime(as of 2003),the Nuclear Suppliers Group(as of 2004),and the Wassenaar Arrangement(as of 20

150、03)100have catch-all provisions in their pacts to counter military-and proliferation-related efforts by global actors of concern.101 The Wassenaar Arrangement,in particular,officially released best practice guidelines for its member states to comply with catch-all restrictions on dual-use goods and

151、technologies.102 Likewise,several catch-all authorities in the UN Security Council resolutions serve the same overall counterproliferation objectives.103As a result,numerous U.S.allied and partner countries across the globe subscribe to catch-all controls to restrict the export of unlisted dual-use

152、items for WMD or conventional military purposes.Because the capabilities,interests,and resources of these countries respective stakeholders may beget varying results,the value of catch-all controls may change according to the circumstances of the country applying them.104 Nevertheless,as Germany arg

153、ued in 2003,adopting catch-all controls can encourage countries to pursue more targeted export control regimes,thereby prioritizing rather than inhibiting trade.105 Furthermore,catch-all regulations are an efficient tool of control when there are no existing“international standards.to define paramet

154、ers for a list item,”according to the Stockholm International Peace Research Institute(SIPRI).106 Hence,in the case of emerging technologies,catch-all controls“enable partners to balance security-driven control requirements with economically driven trade-facilitation imperatives,by avoiding the intr

155、oduction of broad list-based controls while retaining the ability to impose controls based on available intelligence.”107While the Biden administration has not made any readily discernible changes to the U.S.governments catch-all control policies,recent joint compliance notes from the Departments of

156、 Commerce,Justice,and the Treasury reveal the current administrations readiness to encourage improved export administration enforcement among the U.S.public through shared guidance.Hence,the July 2023 tri-seal compliance note titled Voluntary Self-Disclosure of Potential Violations implores the priv

157、ate sector to prioritize safeguarding U.S.technology in the context of strategic competition by carefully observing export controls and other national security laws.108Three months earlier,the U.S.government published a tri-seal compliance note titled Cracking Down on Third-Party Intermediaries Used

158、 to Evade Russia-Related Sanctions and Export Controls to improve enforcement of economic measures against Russia after its invasion of Ukraine.109 This March 2023 compliance note focused on strategies that Russian covert procurement operators have leveraged to sustain Moscows war machine by illicit

159、ly acquiring sensitive U.S.-origin items.110 Moreover,this note offers invaluable insight into potential red flags by previewing the tactics,techniques,and procedures bad actors use to acquire non-listed items falling under the purview of catch-all controls:111 using corporate vehicles to obfuscate

160、ownership,funding sources,or country associations;demonstrating aversion to share information about the intended end use of an item;wiring transfers internationally through shell companies;“declining customary installation,training,or maintenance”associated with an item;using an internet protocol ad

161、dress inconsistent with the buyers reported location;making last-minute changes to shipping instructions,particularly when they do not align with typical“customer history”or“business practices”;20|Optimizing Export Controls for Critical and Emerging Technologies paying through a“third-party country

162、or business not listed on the End-User Statement or other applicable end-user form”;and using personal,not company,email addresses.Through these public alerts,the Biden administration has leaned on the U.S.private sector to bolster its ability to fight against export control circumvention.In a simil

163、ar fashion,the U.S.government should continue collaborating with allies and foreign partners to enhance the efficacy of their export controls by sharing relevant actionable information and administering educational trainings that offer best practices guiding effective enforcement.Securing improved f

164、oreign buy-in to these practices would help ease the collective burden on BIS export administration and enforcement capabilities.Denied Persons List(DPL)Inclusion on the DPL follows as a result of engaging in activities that violate U.S.export control laws and regulations.It is not specific to any c

165、ountry or item.In 2018,the United States added the Chinese telecommunications company ZTE to the DPL for engaging in illegal exports of U.S.-origin technology to Iran and North Korea.As a result,the company faced severe restrictions on its ability to procure U.S.-made components and technology(the r

166、estrictions were originally set to last for seven years).112 Nevertheless,ZTE was removed from the list a few months later.113 The DPL is different from the Entity List,where companies such as Huawei have been placed indefinitely.114 Other examples of DPL additions include persons involved in the re

167、export from Singapore to Iran of global positioning system(GPS)engines originally produced by a U.S.company.115Unverified List(UVL)The UVL addresses the risk of unauthorized end use or diversion of controlled items to unauthorized locations.Companies or individuals are placed on the UVL if they fail

168、 to provide sufficient documentation or information to verify the legitimacy of their intended transactions involving items originating from the United States.In February 2022,BIS added 33 Chinese entities to its UVL because it could not verify the companies were operating in good faith due to end-u

169、se checks that could not be completed for reasons“outside the U.S.Governments control.”116 Universities and research institutes were also among those added.117 Removal from the list is based on the listed person demonstrating that they are acting in good faith or presenting acceptable bona fides of

170、their ability to engage in legitimate end use.118 A case in point is the Department of Commerces decision to remove 33 entities from the UVL in August 2023 after they cooperated with BIS end-use checks to prove their status as reliable end users.119 Thus,unlike the DPL,the UVL is more process orient

171、ed because it targets foreign parties whose credibility or intentions cannot be substantiated due to inadequate documentation or verification.120 Parties on the UVL have not necessarily committed violations but have prompted concerns from BIS during the export licensing process.As a result,the UVL i

172、s inherently narrower in scope and offers an effective tool to prevent illicit technology transfer.21|William A.Reinsch,Thibault Denamiel,and Eric MeyersMilitary End-User(MEU)List BIS amended the EAR to create the MEU List in December 2020.This list,which the ERC can modify through additions or dele

173、tions,launched with 45 Russian companies and 58 Chinese companies the Department of Commerce deemed to be military end users.The MEU prohibits listed parties from receiving certain items without a license from BIS.121 Prior to the lists existence,U.S.persons were largely responsible for identifying

174、potential military end users when exporting items.To streamline compliance,BIS created this comprehensive but non-exhaustive list for the U.S.public to reference.The U.S.government has defined military end use to include any item supporting or contributing to the operation,installation,maintenance,r

175、epair,overhaul,refurbishing,development,or production of military items described on the United States Munitions List(International Traffic in Arms Regulations)122 or items classified under Export Control Classification Numbers(ECCNs)ending in A018 or under the 600 series.123 These ECCNs include ite

176、ms related to materials processing,electronics,telecommunications,information security,sensors and lasers,and propulsion.Items subject to the MEU List also include mass market encryption devices and software,numerous common electronic components,and parts designed for vessels.Nonetheless,the existen

177、ce of the MEU List does not absolve U.S.exporters from conducting due diligence on entities not identified on the MEU List.Past instances have revealed U.S.companies facing criminal charges for exporting dual-use industrial equipment connected with nuclear-capable ballistic missile components to cou

178、ntries such as India.Even so,Chinese entities are now the primary targets of the MEU List.For instance,in January 2021,the United States added the China National Offshore Oil Corporation to the MEU List due to its involvement in activities in the South China Sea determined to support Chinas military

179、 modernization efforts.22|Optimizing Export Controls for Critical and Emerging TechnologiesReexamining the Commerce Control List CCL FrameworkThe CCL,much like the other lists described,is undergoing transformation at the high end:items pertaining to advanced technologies,such as chips used to bolst

180、er AI capabilities,are being added to BISs controls.Even so,the CCL needs to be reviewed according to the same through line as other tools the agency uses.As previously noted,there is no Goldilocks solution when it comes to export controls.Most items on the CCL have good reason to be there,but rapid

181、ly changing technologies,diversifying capabilities in other countries,and the evolving nature of the threat require more frequent review and revision.To that end,BIS should devote more attention to emerging technologies at the margins of the latest technology advancements to ensure U.S.export contro

182、ls policy effectively sustains U.S.technological primacy.Items the CCL covers must be reviewed according to a framework that considers both the capabilities of countries of concern to make or acquire many of these items without U.S.input and the role of economic partners and allies in supporting con

183、trol policies.The following framework provides a series of guiding questions to illuminate a review of the CCL.The review process divides CCL items into two main categories:items for which export controls would be loosened and items for which controls would be sustained or tightened.Outlined below a

184、re case studies of items pertaining to both categories.23|William A.Reinsch,Thibault Denamiel,and Eric MeyersRapidly changing technologies,diversifying capabilities in other countries,and the evolving nature of the threat require more frequent review and revision.Explanation of the FrameworkThe ques

185、tion of whether to tighten,decontrol,or maintain certain export control designations requires thorough analysis.When contemplating updates to the CCL,BIS should consult not only with domestic manufacturers and innovators but also with allied and foreign partner nations to better understand how econo

186、mic interests intersect with U.S.security interests at home and abroad.Risk factors to consider in the domestic arena include the effects on U.S.technology capabilities.Such an analysis might include assessing the extent to which a proposed CCL update would enhance or undercut U.S.industry and its a

187、bility to maximize and subsequently reinvest profits.Other important domestic issues include how an export control change might stimulate or damage research and development and how it could strengthen or weaken U.S.security interests.BIS should also gauge how a CCL update might affect U.S.allies and

188、 partners because unilateral perspectives alone are insufficient to protect U.S.interests.As global supply chains become increasingly complex,maintaining these relationships will be critical to sustaining U.S.technological innovation.Accordingly,the United States should assess not only whether propo

189、sed CCL changes align with multilateral export control regimes but also whether they enhance or undercut relevant industries and security in allied and partner nations.Another factor to judge involves measuring ensuing effects on foreign scientific and technical partnerships with the United States.Y

190、et another dynamic to ponder when updating the CCL includes investigating how a proposed measure would achieve its intended outcome against actors of concern while closing any potential loopholes they could exploit.Doing so requires carefully calculating the extent to which such actors rely on sourc

191、ing an item specifically from the United States,its allies,or its partners,or on securing sufficient substitutes at scale from third countries.Another element to probe is whether the target of an export control designation can indigenously design and manufacture an item at scale.A risk assessment me

192、thodology balancing the competing demands of U.S.national security,economic impacts,and foreign partner interests would include the following questions:1.What impacts would the proposed action have on the United States?Would it enhance or undermine U.S.industry and its ability to maximize profits?Wo

193、uld it stimulate or damage U.S.research and development?Would it strengthen or weaken U.S.security interests?2.What impacts would the proposed action have on allies and trusted partners?Would it align with allied,partner,and multilateral export control regimes?Would it enhance or undercut industry i

194、n allied and trusted partner nations?24|Optimizing Export Controls for Critical and Emerging Technologies Would it advance or counteract allied and trusted partner security interests?Would it affect their scientific and technical cooperation with the United States?3.Would the proposed action prevent

195、 countries of concern from sourcing the item?To what extent do they rely on importing the item from the United States,its allies,or its partners?Can they indigenously design or manufacture the subject item(s)at scale?Can they secure comparable substitutes for the item at scale from third countries?R

196、ole of Multilateral Export Control RegimesMany of the more than 3,100 items on the CCL are also controlled by multilateral export control regimes.As a member of these regimes,the United States agrees to abide by their guidelines,participate in their information sharing exercises,and add the items th

197、ese regimes control to the CCL.The United States is a member of four multilateral export control regimes:the Wassenaar Arrangement,the Zangger Committee and Nuclear Suppliers Group,the Australia Group,and the Missile Technology Control Regime.Although each regime controls different items,each aims t

198、o coordinate export controls and stop the proliferation of sensitive technologies to actors and end uses of concern but without identifying specific target countries.Wassenaar Arrangement.Created in 1996 to replace the Cold Wareras informal Coordinating Committee for Multilateral Export Controls(COC

199、OM)among most NATO countries,Japan,and Australia,the Wassenaar Arrangement is a more formalized,voluntary multilateral export control regime with 42 members that controls the export of conventional arms and dual-use goods.124 Unlike COCOM,which targeted the Soviet Union and its allies,the arrangemen

200、t does not target particular countries;rather,it focuses on behaviors the arrangement has deemed unacceptable.Periodically,members of the arrangement must disclose to other members their exports and denied exports of the goods on its List of Dual-Use Goods and Technologies and Munitions List.125 Thi

201、s information exchange helps prevent the buildup and proliferation of sensitive technologies and holds members accountable for the export of such goods.While members are expected to adopt their own export control regulations based on the arrangement,the decision to approve or deny exports is up to i

202、ndividual members.In fact,all decisions are achievable only by consensus of the arrangements member states.126 Thus,items are added or subtracted from the arrangements list by consensus,as was the case for COCOM.127 While the Wassenaar Arrangement has increased transparency compared to COCOM,which n

203、ever published its control lists,128 the arrangement is far from perfect.Although Russias inclusion in the arrangement allowed for some increased transparency following the Cold War,its participation has rendered it less effective since its invasion of Ukraine in 2022.129 Thus,despite widespread app

204、etite among foreign countries to deprive the Kremlins war machine of the ability to sustain its war against Ukraine,130 Russia has objected to most new control proposals.Furthermore,the absence of China,Belarus,and Israelthree major arms exportersfrom the arrangement is notable.131 Nuclear Suppliers

205、 Group.The Zangger Committee and Nuclear Suppliers Group aim to stop nuclear proliferation by regulating the export of nuclear material and related technologies.The 25|William A.Reinsch,Thibault Denamiel,and Eric Meyersgroup comprises 48 nuclear-supplier countries that all agree to adhere to the gui

206、delines for nuclear transfers and for transfers of nuclear-related dual-use equipment,materials,software,and related technology.132 The guidelines create criteria for how members should responsibly export nuclear-related items and technology for peaceful purposes and not contribute to proliferation.

207、Additions to the guidelines are accepted by consensus,and members are responsible for incorporating these regulations into their national export control regimes.133 The Australia Group.The Australia Group focuses on controlling the export of chemical and biological weapons(CBWs)and related goods.134

208、 Following the Iraq-Iran War,in which chemical weapons were deployed,Australia convened a group of 15 countries that independently created export controls on CBWs.Today the group has 42 members.All members must incorporate the control list into their national export controls and deny exports from th

209、e list when the proposed end user may use them for CBWs.135 The list is updated at an annual meeting by consensus.Missile Technology Control Regime.The Missile Technology Control Regime is an informal group of countries aiming to ensure nonproliferation by controlling the export of missiles and rela

210、ted technologies.Currently,35 countries belong to the regime;they are expected to adhere to the regimes guidelines and control the items listed in the Equipment,Software,and Technology Annex.136 Furthermore,in response to conflicts around the globe,the UN Security Council has enacted arms embargoes

211、on particular countries or regions with the aim of reducing the number of weapons in a violent situation.137 The councils Sanctions Committee is responsible for creating the embargo,138 but the entire council votes on it,thus allowing one of the five permanent members to veto the embargo.After the m

212、easure passes,all members are expected to implement the embargo.However,many countries lack the sophisticated export control rules necessary for successfully implementing the embargo.Additionally,the United Nations sometimes struggles with an inability to quickly respond coupled with the threat of a

213、 veto from a permanent member.139Multilateralizing export controls stops users of concern from gaining sensitive items by reducing the number of suppliers available to them,thereby increasing the controls effectiveness.Having multilateral backing also increases the legitimacy of a control because th

214、ere is consensus that the control is justified.Hence,items on the CCL fall into two categories:items controlled by multilateral agreements and items BIS has added unilaterally.Items that fall into the latter category are politically easier to remove because BIS can amend the list at will,adding or r

215、emoving items from the CCL without needing congressional approval.When BIS adds or removes items,the agency publishes them on the Federal Register and correspondingly updates the CCL.140Updates to items controlled by multilateral agreements are harder to implement.If the United States wishes to remo

216、ve an item from the CCL that is also controlled by a multilateral framework or that disagrees with a multilateral regimes recommended control,it has two options.First,the United States could use a regimes regular meetings to recommend changes to its multilateral control lists.However,changes to the

217、control lists are made on a consensus basis,allowing a single member to reject a proposal.141 Once the regime updates its control list,individual countries must implement the latest changes.Depending on the regime,it can take anywhere from months to 26|Optimizing Export Controls for Critical and Eme

218、rging Technologiesyears to adopt the new regulations.For example,in February 2023,BIS added and removed items from the CCL in accordance with 2021 Wassenaar Arrangement decisions.142 The second option is for the United States to regulate the controlled item loosely.While members of these multilatera

219、l regimes typically update their national lists in accordance with the regimes recommendations,individual countries are responsible for approving or denying licenses.143 In this way,the United States has leeway in implementing multilateral control rules.However,an overly liberal interpretation of th

220、e rules would undermine the regime and would not resolve the issue of domestic manufacturers having to go through timely and expensive regulatory procedures.Therefore,working within multilateral frameworks is more durable and attractive in the long term.27|William A.Reinsch,Thibault Denamiel,and Eri

221、c MeyersCommerce Control List ItemsItems to DecontrolClear instances of items that can be decontrolled to improve the CCL by alleviating licensing and enforcement capabilities at BIS include items primarily related to health and safety.Two examples are fire extinguishers and life jackets.These items

222、 have common features:Neither is controlled by U.S.allies,making current U.S.policy equivalent to damming half the river.Countries of concern can also easily design and manufacture these items.Like any other inclusion in the CCL,they may be inputs of larger items used for warfare,such as fighter jet

223、s or military vessels.However,they are not essential to the larger item functioning and are purely defensivemeant for crew safety rather than offensive capabilities.Under Category 9 of the CCL,BIS requires a license for the export of fire extinguishers“specially designed for a military use”to China,

224、Russia,and Venezuela.144 BIS cites the RS reason for control.However,controlling the export of military-specific fire extinguishers will not significantly help U.S.national security but instead compromise human safety.The control also hurts U.S.manufacturers,as Canada,the United Kingdom,and the Euro

225、pean Union do not control the export of fire extinguishers;145 this makes foreign manufacturers more competitive because they do not have the added burden of getting a license or consulting with their respective export controls agency.In short,the control of military-specific fire extinguishers is a

226、 prime example of a regulation that can be removed from the CCL without damaging U.S.national security interests or harming U.S.manufacturers.Using this logic,BIS should also remove military-specific life rafts;public address(PA)systems;underwater locator beacons;urine collection bags,pads,cups,and

227、pumps;flame and smoke/carbon dioxide detectors,and lavatories from Category 9 of the CCL.28|Optimizing Export Controls for Critical and Emerging TechnologiesAdditionally,as part of a larger package of controls targeting Russia,BIS now requires a license for life jackets used in the“exploration for,o

228、r production of,oil or gas in Russian deepwater.”146 Even so,controlling the export of life jackets to Russia will neither significantly impede the Russian energy sector nor its overall war effort.Russia has the technology and capability to manufacture life jackets:in 2021,the nation exported almost

229、$2 million worth of life jackets.147 Controlling U.S.exports of life jackets to Russia makes trivial difference in the ability of the regime under Russian president Vladimir Putin to fund the countrys war effort.Of U.S.partners and allies,only Canada has a similar export control,so eliminating the c

230、ontrol would not greatly affect allied security,economic,or scientific cooperation.148 Including life jackets on the CCL,thus,appears superfluous.Inclusion of life jackets and fire extinguishers on the CCL exemplifies the need to reexamine the CCL.BIS should reexamine listed items to ensure their op

231、en export poses a national security threat.Special priority should be given to items that enhance health and safety,as shown in Table 3.Table 3:Sample Items to Decontrol on the CCLSample ItemsECCNReason for Proposed RemovalLife jacketsCompasses8A992Controlling these items may counteract Washingtons

232、ambition to promote human rights and safety across the globe.Restricting these items may also undercut the U.S.private sector because many are not also subject to multilateral,allied,or foreign partner export control regimes.Emergency lightingLavatoriesPA systemsPotable water tanks8A609Fire extingui

233、shersFlame and smoke/carbon dioxide detectorsLavatoriesLife raftsPA systemsUnderwater locator beaconsUrine collection bags,pads,cups,and pumps9A610Items to ReviewIn reviewing items for decontrol,BIS authorities should consider whether the presence of the United States,along with allies and partners,

234、in a goods market is large enough to make controls effective.The case of commercial drones illustrates the point:the United States initially saw mini helicopters as“toys for hobbyists and failed to invest in more advanced models,”according to AFWERX Prime division chief Col.Tom Meagher.149 That allo

235、wed companies from China,such as drone maker DJI,to gain dominance in the global market,including in the United States.Now,as Washington considers these drones a national security threat,the government has few non-29|William A.Reinsch,Thibault Denamiel,and Eric MeyersChinese alternatives.This lack o

236、f foresight has two main negative consequences.First,as pointed out by Foreign Policy,150 it leaves the United States dependent on countries of concern,especially China,for critical technologies.For example,DJIs drones have been key to combating wildfires in California.151 Second,it makes U.S.export

237、 controls on these dual-use items unworkable because countries of concern possess both the design and manufacturing capabilities to become more independent from U.S.or allied inputs.When it comes to reviewing any item on the CCL,U.S.export control proponents should be careful not to fall into a“Unit

238、ed States is always best”mindset.A critical part of maintaining an export control system is knowing when one is behind,or at least not in the lead,and avoiding further strangling industry through controls instead of focusing on building up capacity.That issue is present at the high end of control co

239、nsiderationsfor instance,regarding quantum technologies,as there are debates as to whether the United States or China has the upper hand.It is also present when reviewing other aspects of the CCL.Regarding lasers,for example,China is poised to match U.S.capabilities in light detection and ranging(li

240、dar)technology.Aside from countries of concern,U.S.allies may also be leaders in their field,such as Japan and Germany in the machine tools sector.In addition to national security,the question of foreign availability is therefore key to considering controls in different sectors.While foreign availab

241、ility will be addressed in greater detail in the third paper,the following examples present three distinct scenarios for CCL review.UAVs are a sector whereas shown in the DJI examplethe United States is one of many players in the global market.A policy of control would therefore give way to signific

242、ant revenue losses,further undermining U.S.competitiveness as well as the broader design-out issue in which entities and countries of concern successfully take U.S.inputs out of a goods value chain to escape controls and further deny revenue to U.S.firms.Field programmable gate arrays(FPGAs)present

243、another challenge:U.S.capabilities are still generally dominant in leading-edge capabilities,but China has the larger market share in legacy items and is now making significant investments to close the technical gap.An effective controls policy would therefore likely take a small-yard,high-fence app

244、roach,152 giving U.S.businesses the opportunity to export most kinds of FPGAs openly,with the exception of the most advanced items.Radiation-hardened electronic components,meanwhile,serve as an industry where the United States maintains a technical advantage but faces increasing commercial competiti

245、on from companies in allied nations.China is now making significant investments to begin to catch up.A broader export controls policy could therefore be applicable for this item,provided it is implemented multilaterally.When it comes to reviewing any item on the CCL,U.S.export control proponents sho

246、uld be careful not to fall into a“United States is always best”mindset.Machine tools,likewise,offer an example highlighting the importance of a multilateral approach,as Japan and Germany lead the market.In addition,the United States and its allies have more advanced capabilities than China,but China

247、s growth demand calls for consideration of controls 30|Optimizing Export Controls for Critical and Emerging Technologieseffects on domestic firms revenue.The same may be said of aviation testing equipment,given U.S.and allied technical superiority and Chinas inability to fully indigenize capabilitie

248、s.However,Chinas growing capabilities in laser technologyin particular lidarrender U.S.controls less effective.The greater national security risk involved with lidar may pertain to imports from China,which could acquire sensitive data if national securityrelevant organizations,such as the military,i

249、mport the technology.Polyimides show how BIS should undergo reviews of thresholdsin this case,chiefly regarding the thickness of the advanced materialto keep the controls regime relevant.Unmanned Aerial Vehicles(UAVs)UAVs and unmanned aircraft systems(UASs)are remotely piloted,optionally piloted,or

250、fully autonomous aerial vehicles.They play a significant role in the commercial and defense sectors due to their potential to use high-profile and controlled technologies and thus are classic dual-use items.The Missile Technology Control Regime,the United Kingdom,the European Union,and Canada all co

251、ntrol UAVs in some shape,even if a UAV is for research or noncommercial use.However,the U.S.-specific control language is the most extensive.The export of UAVs raises concerns because large UAVs have the potential to deliver nuclear weapons while smaller UAVs are capable of delivering CBWs.153 Addit

252、ionally,because these technologies are unmanned,nations may be more willing to use them.However,the export of U.S.-produced UAVs to allied and partner military customers has enhanced military cooperation,interoperability,and the effectiveness of joint operations.154The global UAV market was valued a

253、t$26.2 billion in 2022 and expected to grow to$38.3 billion by 2027.155 The United States,together with Israel,is the largest producer and seller of UAVs globally.156 However,despite being widely considered less capable or reliant than U.S.drones,China has emerged as a rising drone dealer,particular

254、ly of military drones.157 Moreover,China is home to the largest manufacturer of drones,DJI.158 There has been significant market growth in the Asia-Pacific region,particularly in India and China,due to their increased procurement of military drones and stringent U.S.export controls.159 In China and

255、Japan,UAVs are increasingly employed for inspection in the real estate,pollution monitoring,and agriculture sectors.Chinese manufacturers have been especially focused on producing high-performance drones that can operate in different temperatures.160 The UAV market may be segmented into military,com

256、mercial,government,and consumer,with the military segment holding the leading share of the market.161 The key market players are based not only in the United States but also in China and Israel,including DJI(China),Northrop Grumman(United States),Raytheon(United States),Israel Aerospace Industries(I

257、srael),and General Atomic Aeronautical Systems(United States).162 While Israel is the largest UAV exporter,163 China has emerged as the world leader in combat vehicles.Data from SIPRI,which tracks global arms transfers,shows China has delivered 282 combat drones to 17 countries in the past decade,ma

258、king it the worlds leading exporter of the weaponized aircraft.164 As cited in an Al Jazeera article,Akhil Kadidal,an aviation reporter at Janes,noted,“Many of Chinas UAV programmes suggest Beijings interest in creating a better platform than their western counterparts.”165 The same article also wri

259、tes how these UAVs are not only faster than their American counterparts but are said to be capable of carrying a greater weapons payload.”16631|William A.Reinsch,Thibault Denamiel,and Eric MeyersIn addition,Chinese UAVs are often cheaper than their Western counterparts,making them a more attractive

260、alternative for purchasing states.David R.Markov,from the Institute for Defense Analysis,observed,“The price point is so cheap,and the operating costs are so low that many of these countries cant afford not to buy from China.”167According to Defence Procurement International,Chinas defense industry

261、has mastered the complex technologies related to medium-altitude long-endurance(MALE)UAVs and armed drones,but it lags in some state-of-the-art sensors and precision munitions available to Western firms and their defense partners.168 However,the marginal technical differences are seldom significant

262、enough to make up for Western shortcomings in other aspects of the products.Douglas Barry,senior fellow at the International Institute for Strategic Studies said:In terms of performance and cost,on a like-for-like basis,Chinese systems are likely less expensive,and in some areas less capable,but the

263、 latter may not be a concern for many of the purchasing states,where the capability offered is good enough.169Chinas ability to manufacture and sell UAVs at a lower cost,despite their marginally less advanced capabilities,presents impediments to the U.S.UAV sector.The CCLs controls related to UAVs s

264、hould be tailored to the technology margins in which the United States maintains a leading edge and loosen controls related to capabilities where China dominates the market,such as MALE UAVs and armed drones.Doing so would provide more opportunities for U.S.firms to compete against Chinese drones in

265、 third markets,providing more commercial opportunities to expand their revenue base without compromising our security.Field Programmable Gate Arrays(FPGAs)FPGAs are a type of integrated circuit that can be programmed or configured for specific functions in the field.170 In other words,their configur

266、ations can be altered without replacement or other modification of their hardware.As a result,they have a wide range of applications,including in military systems and critical infrastructure such as telecommunications and aerospace,especially when they are radiation tolerant.For example,many U.S.def

267、ense systems use FPGAs,which can also contain proprietary designs and intellectual property.171 Safeguarding these items is critical to preserving U.S.technological advancements from potential threats that are currently behind in the technology,such as China.Western-made FPGAs have also stood out as

268、 a particularly important component used in Russian military systems recovered on the battlefield in Ukraine.By restricting access through export controls,Washington can limit its adversaries proliferation of sensitive technologies.FPGAs are also controlled by the Wassenaar Arrangement,Canada,the Eu

269、ropean Union,and the United Kingdom.Nonetheless,FPGAs are just one element in larger technological ecosystems,and some parts of this technology are produced using components and expertise from multiple countries.Therefore,maintaining export controls could disrupt overall U.S.technological progress.I

270、n 2022 the FPGA market size was estimated at$10.46 billion,172 and it is expected to have a compound annual growth rate of 10.8 percent from 2023 to 2030.In 2022 the Asia-Pacific region accounted for the highest revenue share at 46 percent in 2022,173 driven largely by Chinas revenue from its contin

271、uous investments and initiatives,particularly in the military and aerospace industry.The North American revenue share was just over 23 percent in 2022.Major players in the FPGA market include Intel,Qualcomm,NVIDIA,Broadcom,AMD,Quicklogic,Lattice Semiconductor,32|Optimizing Export Controls for Critic

272、al and Emerging TechnologiesAchronix Semiconductor,and Microchip Technology.174 These major designers are U.S.firms,but they depend on Taiwan for most of their manufacturing,which has raised concerns about security vulnerabilities in the U.S civilian economy and the U.S.defense industrial base.175 T

273、he United States has struggled to secure a domestic production base as chipmakers have opted to keep much of the manufacturing offshore for competitive reasons.Chinese FPGA makers started late but,due to significant investments and intellectual property transfers,have now laid a solid foundation in

274、the low-end segment of the market.According to a JW Insights report,they will shift their focus to mid-to high-end FPGAs that can be inputs for varied applications such as 5G and AI.Although the growth of Chinese market demand has spurred these efforts,as it stands,domestic Chinese producers can mee

275、t only about 30 percent of need.176Even as the Chinese government aims to mobilize its national champions and leading enterprises to grow domestic manufacturing capabilities to balance out Chinas current FPGA reliance on overseas supply,the more advanced U.S.industry has been undergoing growth.U.S.e

276、xport control authorities therefore face a challenge in the microelectronics sector:a performant China in the legacy market behind on advanced capabilities but quickly allocating resources to close that gap.Expansions of controls on integrated circuits have resulted in work-arounds and more porous p

277、olicies.Authorities should ensure the FPGA policy remains adaptable to Chinas dominance in the legacy space and curb Chinas ability to obtain advanced design and manufacturing capacities.As Chinese firms aim to move into the 16/28-nanometer high-end FPGA market,177 BIS should control exports accordi

278、ng to that high benchmark to avoid starving U.S.companies of revenue and to keep them dominant in global production.Radiation-Hardened Electronic Components Radiation-hardened electronics are microelectronic components(such as circuits,resistors,diodes,and capacitors),single-board computer CPUs,and

279、sensors that are less susceptible to damage from exposure to radiation and extreme temperatures.178 The global radiation-hardened electronics market is driven by demand in commercial satellites,intelligence,surveillance,and reconnaissance activities,and an increasing use of electronic systems that c

280、an withstand a severe nuclear environment.Radiation-hardened electronic components are used in major industries and technologies such as aerospace and defense,nuclear,and medical.The market for this technology was valued at$1.5 billion in 2022 and is expected to grow to$1.8 billion by 2027.179In war

281、time,securing radiation-hardened electronics is critical,as they are able to withstand extreme radiation and temperatures to enable advancing military nuclear and space programs.180 Russian companies remain subject to sanctions by the Department of Defense.Radiation-hardened electronic components ar

282、e subject to the WA and are thereby relevant to U.S.allies and partners.North America holds the largest share of the market for radiation-hardened electronics,accounting for a market share of 43.2 percent in 2022 due to leading companies such as Honeywell Aerospace and Defense,Microchip Technology,a

283、nd AMD,181 as well as the presence of major space research institutes including NASA.182 The United States is the major supplier of radiation-hardened electronic components to the rest of the world,though other nations have their own homegrown players,such as BAE Systems(United Kingdom),Renesas Elec

284、tronics(Japan),Infineon Technologies(Germany),and STMicroelectronics(Switzerland).18333|William A.Reinsch,Thibault Denamiel,and Eric MeyersThe Asia-Pacific market is expected to grow at the highest rate due to innovative manufacturing technologies in radiation-hardened electronics and increased spen

285、ding on homegrown satellites and space missions.184 This trend is supported by the work of renowned institutions such as the Indian Space Research Organization,China National Space Administration,Japan Aerospace Exploration Agency,the Indian Intelligence Agencies,and Japan Ministry of Defense.185 Ch

286、ina is also heavily investing in obtaining and indigenizing its production of radiation-hardened electronics and technology using radiation-hardened electronics.Through cash incentives,IP theft,and direct investments,186 China is attempting to bolster its domestic manufacturing capabilities in techn

287、ologies that use radiation-hardened electronics.In March 2022 the Wuhan city government provided$7.88 million in cash incentives for projects connected with manufacturing rockets,satellites,and spacecraftall of which use radiation-hardened electronic components.187Chinese efforts to bolster its radi

288、ation-hardened electronic components sector could indicate increasingly fierce competition to U.S.leadership in this area.However,current U.S.primacy in the sector means controls on these components are still workable.Given allied governments programs to develop their own capabilities,as well as the

289、ir private sector firms advances,a multilateral approach including,among others,Japanese,German,and Swiss inputs would be most effective in curbing countries of concerns access while maintaining important economic security partnerships.Machine ToolsMachine tools are often referred to as the“mother o

290、f machinery”because they are used to cut,shear,and cast metal and other materials to create usable products or parts.188 Machine tools are becoming increasingly sophisticated and can now use robotic technology to create intricate technologies and electronics.189 Because of their role in innovation a

291、nd manufacturing,machine tools are used in the commercial and defense sectors.Within the defense sphere,machine tools can be used in the production of weapons systems,nuclear technology,and aerospace technology.190 Due to their dual-use nature,the export of machine tools is controlled by the CCL,the

292、 Wassenaar Arrangement,and the Nuclear Suppliers Group.191 Under the CCL,several types of machine tools are subject to review if they are being exported to countries with NS,NP,or AT reasons for control.The global machine tools market was valued at$87.9 billion in 2022 and is expected to grow to$93.

293、8 billion in 2027.192 Asia is the largest market for machine tools.193 Demand for milling and computer numerical control(CNC)machines is fueling the growth of the machine tools industry,with customers primarily in the automotive,defense and aerospace,construction,power,and industrial sectors.194 CNC

294、 machine tools are the most valuable and sensitive.By using computer-guided instructions,CNCs are used to“provide a level of efficiency,accuracy and consistency that would be impossible to achieve through a manual process.”195Japan,Germany,and the United States are the largest producers of machine t

295、ools.196 The key market players include MAZAK(Japan),TRUMPF(Germany),DMG MORI(joint Japan-Germany),MAG(United States),Amada(Japan),Okuma(Japan),Makino(Japan),GROB(Germany),Hass(United States),and EMAG(Germany).However,many of these players have production companies in China.197 The growth in Chinese

296、 demand for machine tools has been driven by its economic growth and increased focus on producing higher-end goods in the automotive,aerospace,and energy sectors.198 Currently,China is incapable of producing high-end CNC machine tools.The localization rate of medium and high-end machine tools is les

297、s than 10 percent because Chinese companies 34|Optimizing Export Controls for Critical and Emerging Technologiesrely heavily on imports from Japan and Germany.199 Despite the rapid growth of Chinese research and development in CNC machine tools,Chinese-built machines are less accurate and have a hig

298、her failure rate compared to Japanese or German-built CNC machine tools.200 This difference is primarily because of Chinas inability to manufacture high-end bearings,a market dominated by Germany,Japan,Sweden,and the United States.201Given current U.S.and allied technical dominance in the high-end m

299、achine tool market,as well as their significance in medium tools production capacity,controls on machine tools are currently workable.While advanced horizontal positioning accuracy reached 0.015/1,000 milimeter(mm)and 0.0030.007 mm in repeat positioning accuracy,Chinas domestic CNC machine tools onl

300、y reach an accuracy of 0.025/1,000 mm and a repeat positioning accuracy of 0.010.015 mm.202 U.S.export control authorities can therefore impose controls using these thresholds to curb countries of concerns development in the sector.Likewise,controlling the export of the inputs of machine tools can s

301、top adversaries from indigenizing this technology.High-end machine tools require specialty parts such as bearings and semiconductors,both of which BIS controls.Lastly,the case of machine tools again highlights the need for U.S.authorities to take a multilateral approach to export controls.Japan and

302、Germany dominate the global supply,203 and controlling these goods without a trilateral coordinated approach makes for inefficient policies resulting in little curbing of countries of concerns capabilities,as well as long-term replacement of U.S.firms place in the market share.LasersLasers,or light

303、amplification by stimulated emission of radiation,are used in the medical,commercial,telecommunications,scientific,and defense industries for a wide range of applications.Their use in military settings has become increasingly common.A few popular uses include missile guidance,missile defense,defense

304、 against UAVs,and targeting of weapons systems.204 Given their dual-use nature,BIS has an entire category of the CCL dedicated to sensors and lasers.205 Several types of lasers are subject to review if they are being exported to countries with the NS,AT,RS,MT,or NP designations for control.Lasers ar

305、e also controlled through the Wassenaar Arrangement and the Nuclear Suppliers Group.206The global laser technology market in 2021 was valued at$17.8 billion and is expected to grow to$25.6 billion in 2027.207 Asia is the largest market for lasers,holding 41.4 percent of the overall market in 2021.De

306、mand in the region is driven by increased industrialization,early adoption of laser technology,and previous research and development investments resulting in effective use of the technology.In Asia,China is the largest market for lasers;in 2021,Chinas market was worth$12.9 billion.208Countries of co

307、ncern,namely China,have laser technology comparable to that of allied countries.Chinas laser industry has seen significant developments since the beginning of the Shanghai Stock Exchange STAR Market in 2019,a Chinese science and technologyfocused equities market.209 There are over 170 large-scale la

308、ser manufacturers in China,and scientists have made advancements in both commercial and military applications.Still,there are lasers used in semiconductor manufacturing that countries of concern such as China have yet to indigenizefor example,the lasers used in EUV lithography required to produce cu

309、tting-edge chips.The United States is working to convince other countries to create export controls to stop further leakage of these chip technologies.35|William A.Reinsch,Thibault Denamiel,and Eric MeyersAn evolving case where the United States is losing such leverage involves lidar,a dual-use tech

310、nology using laser pulses for active remote sensing with applications ranging from enabling autonomous navigation and battlefield mapping to facilitating the iPhones ability to measure items and 3D scan environments.210 With wide-reaching implications for automotive,agriculture,weather,manufacturing

311、,and other sectors,lidars market size is projected to grow from$2.31 billion in 2023 to$7.94 billion by 2030.211 While North America is the largest market for lidar,the Asia-Pacific market is rapidly growing with China at the helm.According to the Congressional Research Service,Chinas strategy of le

312、veraging industrial policies,developing corporate partnerships,and acquiring foreign companies and associated know-howincluding from U.S.,allied,and partner nationshas advanced Chinas status in the global lidar market.212 This advance is notable in the automotive sector,where it is increasingly used

313、 to enable self-driving cars and advanced driver assistance systems by providing 3D maps of the environment around vehicles.213 This strategy has China-based companies capturing more than 58 percent of the global market share in the automotive lidar industry in 2022.Chinese firms are ready to quickl

314、y take a leadership position in the sector in the near future.Moreover,some analysts say the lidar market is ripe for consolidation,which may give China openings to acquire U.S.firms and expand.While intellectual property and technology transfers initially helped Chinese firms,their capabilities and

315、 dominance of the market render U.S.controls increasingly less relevant and effective.Underscoring future Chinese dominance,China implemented export restrictions on lidar systems in April 2023.As a result of Chinas growing hold of the sector,BIS authorities should focus on loosening controls to prov

316、ide additional commercial opportunities to U.S.firms in the sector.Perhaps the larger national security threat when it comes to lidar technology and China now lies in Chinese imports rather than exports.As the Congressional Research Service points out,the U.S.federal government,state governments,and

317、 military may be or are considering using Chinese lidar systems.214 China could use data compiled by its lidar systems to acquire sensitive information or exquisite mapping of U.S.infrastructure,given Chinese policies aim to develop technologies that are interoperable for civilian and military use,w

318、hich may allow Chinese state access.The risk posed by imports of Chinese systems highlights the importance of promoting control policies that allow U.S.domestic firms to acquire more revenue to develop these capabilities and return to a global leadership position.Advanced Materials:PolyimidesAdvance

319、d materials are materials or substances with unique properties or applications in advanced technologies.These can include composite materials,high-performance alloys,superconductors,nanomaterials,ceramics and semiconductor materials,specialized chemicals,and carbon fiber.These materials are of high

320、strategic and national security significance,as they are used in the production of critical components of defense and military equipment.Therefore,these materials are often subject to export controls to prevent proliferation of sensitive technologies by adversaries.One illustration of advanced mater

321、ials is aromatic polyimides,a class of synthetic polymers known for possessing superior strength,thermal stability,and resistance to radiation.215 For those reasons,they are often used in high-tech domains such as aerospace and military applications.For example,a widely used aromatic polyimide,Kevla

322、r,is used extensively in body armor,ballistic helmets,and 36|Optimizing Export Controls for Critical and Emerging Technologiescut-resistant gloves and to reinforce composite materials.216 The United Kingdom,European Union,Canada,and the Wassenaar Arrangement all have controls on various aromatic pol

323、yimides.The global polyimide market,which includes aromatic polyimides,was valued at$34 billion in 2022 and is projected to reach$59.47 billion by 2032.217 The aromatic polyimides segment accounted for 17 percent of revenue share in 2022.The Asia-Pacific region dominated the market with the highest

324、revenue share,more than 56 percent,in 2022.North America is expected to have a compound annual growth rate in the global polyimide market of 2.7 percent from 2023 to 2032.218 Growing demand for high-quality and long-lasting consumer electronics and their use in electric vehicles are generating incre

325、ased demand for polyimides.While the Asia Pacific dominates in terms of revenue shares,U.S.and allied firms still dominate the global supply of polyimides:the major polyimide market players come from the United States,South Korea,Germany,Taiwan,and Japan.Due to the Asia-Pacific regions expected impo

326、rtance for the industrys growthespecially when it comes to Chinaas well as the materials importance in several commercial sectors such as automotive and textiles,U.S.controls on polyimides can still be effective.219 But BIS should continue undergoing reviews of controls based on thickness.Given that

327、 thinner polyimide products are predominantly used in low-tech applications,whereas thicker or coated/laminated polyimides are used in more sensitive dual-use applications,220 a BIS review increasing the current thickness threshold of controls(0.254 mm)would enable U.S.firms to take greater advantag

328、e of the growing Chinese market.Testing Equipment:Aircraft EnginesAviation testing equipment refers to a variety of tools used to maintain the hydraulic and electronic systems of an aircraft,including calibration,inspection,testing,and assessment.These tools are crucial for ensuring the safety and r

329、eliability of aviation systems.This equipment is constantly evolving,becoming more technically sophisticated,and incorporating advanced electronics and software.It is subject to export controls to ensure it is not diverted to entities of concern for military purposes.The global aviation test equipme

330、nt market was valued at$7.86 billion in 2022 and is expected to grow to$8.25 billion in 2023 at a compound annual growth rate of 4.9 percent and to$9.84 billion by 2027.221 The Asia Pacific was the largest region in this market in 2022 and is also forecasted to be the fastest-growing region.This dem

331、and for testing equipment is also bolstered by increasing expenditure on UAVs in both military and civilian sectors.222As CSIS has previously written,China does not have the full indigenous ability to produce aircraft engines,even as it has ambitiously aimed to reduce its foreign dependencies by acc

332、essing foreign technology,expertise,and intellectual property abroad in U.S.,allied,and partner nations.223 Although China has had some success in procuring Western aircraft technologies,its lack of established expertise in the area,in particular,has inhibited the countrys ability to bridge technolo

333、gical gaps with industry leaders such as the United States.Consequently,the United States,as well as some of its allies and partners,has taken steps to stem Chinas ability to access avenues to related know-how.224 As a result,U.S.export control authorities have more leeway when it comes to influencing Chinas rise in the aerospace sector.Given the technical superiority of Western technologies,tight