1、Optimizing U.S.Export Controls for Critical and Emerging TechnologiesWorking with PartnersAUTHORSWilliam ReinschThibault DenamielMatthew SchleichFEBRUARY 2024A Report of the CSIS Scholl Chair in International BusinessOptimizing U.S.Export Controls for Critical and Emerging TechnologiesWorking with P

2、artnersAUTHORSWilliam ReinschThibault DenamielMatthew SchleichFEBRUARY 2024A Report of the CSIS Scholl Chair in International BusinessWilliam Reinsch,Thibault Denamiel,and Matthew Schleich|IIAbout CSIS The Center for Strategic and International Studies(CSIS)is a bipartisan,nonprofit policy research

3、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 is led by John J.Hamre,who has served as president and chief exec

4、utive 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 professionalism,and talent development.CSISs values work in concert toward

5、 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 increase the knowledge,awareness,and salience of policy issues w

6、ith 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 world.CSIS does not take specific policy positions;accordingly,all v

7、iews expressed herein should be understood to be solely those of the author(s).2024 by the Center for Strategic and International Studies.All rights reserved.Center for Strategic&International Studies1616 Rhode Island Avenue,NWWashington,DC 20036202-887-0200|www.csis.orgOptimizing U.S.Export Control

8、s for Critical and Emerging Technologies|IIIAcknowledgmentsThe authors would also like to thank the numerous current and former government officials and private sector experts who provided their invaluable input.This report is made possible through generous support from the Smith Richardson Foundati

9、on.William Reinsch,Thibault Denamiel,and Matthew Schleich|IVContentsIntroduction 1Critical and Emerging Technologies Supply Chains 3Revamping Multilateral Export Control Regimes 31Conclusion 37About the Authors 40Endnotes 41Optimizing U.S.Export Controls for Critical and Emerging Technologies|1Intro

10、ductionThe rapid appearance of critical and emerging technologies has transformed the landscape of economic growth and the meaning of national security.The global nature of these new technologies value chains means that economics and geostrategy are now intertwined,and allied countries need to work

11、with each other to guarantee their own security.No one nation dominates the landscape of quantum technologies,semiconductors,biotechnology,artificial intelligence(AI),or telecommunications.Therefore,just as these new dual-use tools require inputs from around the world,their development is also trigg

12、ering a global race to the top.A cornerstone of the technology race,at the center of which is the U.S.-China strategic competition,is the struggle to control the flow of trade of these leading-edge technologies.Export controls are a critical tool at nations disposal,and they are therefore central to

13、 the U.S.national security strategy.The United States has already undergone a paradigm shift regarding its export control policy to tackle these new national security challenges.In October 2022,the Biden administration updated the semiconductor export controls,strengthening restrictions on chip manu

14、facturing equipment by widening the scope of inputs and countries covered.The administrations focus on critical and emerging technologies role in economic statecraft policy has produced several executive orders,including one on outbound investment in semiconductors,quantum technologies,and AI,and th

15、e another on AI governance specifically.Given the global nature of critical and emerging technologies value chains,unilateral application of export controls has limited utility in the long term and will actively harm the competitiveness of the nation imposing the curbs.Countries that experience the

16、adverse effects of export controls William Reinsch,Thibault Denamiel,and Matthew Schleich|2that have competing firms can,in time,scale up to fill the gaps left by export control policies,rendering them less effective.In addition,as these countries fill the gap and the targeted entities innovate away

17、 from the controlled inputs,the threat of being designed out becomes significant.For instance,Beijing has responded to sweeping U.S.-led semiconductor export curbs against China by seeking to“de-Americanize”its chip sector.As such,Washingtons export control policy is pushing Chinaand potentially oth

18、er countriesto devise novel pathways to remove U.S.technology from its designs.These design-out pathways threaten to expose U.S.export controls to medium-and long-term vulnerabilities,damaging U.S.ambitions to promote and protect its semiconductor sector.As a result,Washington needs to walk a fine l

19、ine to combat such vulnerabilities so it can sustain its technological edge,slow down advanced technologies development by countries of concern,avoid alienating allies and partners,and not undercut U.S.industry.If the United States ignores design-out developments resulting from its own export contro

20、l policy,Washington may find its export curbs increasingly vulnerable to pushback and circumvention.It is thus crucial to adopt a multilateral approach to export controls.Coordinated curbs with other key global players along a controlled items supply chain are more immediately effective and sustaina

21、ble.Multilateral export-control regimes already have an established presence on the world stage.The United States list of dual-use items,the Commerce Controlled List(CCL),is also covered in the Wassenaar Arrangement,the Nuclear Suppliers Group,the Australia Group,and the Missile Technology Control R

22、egime.These aim to coordinate export controls and curb the transfers of sensitive,dual-use technologies to actors of concern.This report outlines the different nations and entities that are prominent in the semiconductor,quantum technology(QT),biotechnology,AI,telecommunications,and uncrewed vehicle

23、s supply chains.The first report in this series laid out an explanation of critical and emerging technologies inputs and their applications to national security.1 The second paper proposed ways to rethink administering the major lists that underlie the U.S.export-control regime.2 This third and fina

24、l element of the project maps out the actors involved in producing and distributing leading-edge items and outlines how the United States can formulate a multilateral export-control regime best suited to tackle the national security issues that arise from international transfers of critical and emer

25、ging technologies.Optimizing U.S.Export Controls for Critical and Emerging Technologies|3Critical and Emerging Technologies Supply ChainsQuantum TechnologyAt their most basic,quantum technologies seek to harness the natural properties of matter and energy identified by quantum physics researchers.3

26、Though quantum theory can trace its roots to 1900,applications have been difficult to achieve.4 However,recent attention has catapulted quantum into the forefront of national security,and U.S.policymakers are seeking strategies to deal with the risksand gain the advantagesassociated with the new pot

27、ential capabilities.5 Traditional information science deals with“bits,”or binary values that can be either 0 or 1.Although traditional computers have grown incredibly complex,their base-level carriers of information are bits.In quantum information science,the base-level carriers of information are q

28、uantum bits,referred to as“qubits.”Qubits are“probabilistic and can exist in a state of superposition,in which the qubit will be in both the 0 and 1 states simultaneously.”Another important property of qubits is“entanglement,”the ability to be correlated with one another“in such a way that the state

29、 of one qubit depends on the state of the other.”This property,which is not found in traditional information science,allows quantum technologies to“perform certain calculations much faster than classical computers.”6 Quantum technologies encompass three fields that have national security implication

30、s:quantum computing,quantum communication and cryptography,and quantum sensing.7 Quantum technologies potential is in the eye of the beholder;while some say quantum technologies present an opportunity to enhance current military capabilities,others argue they represent“a new dimension of war”altoget

31、her.8 William Reinsch,Thibault Denamiel,and Matthew Schleich|4Quantum computers are currently in their infancy as viable technology.However,they have the potential to enhance military systems and pose a direct threat to digital security architecture such as public-key cryptography.Many security expe

32、rts see AI as a threat to national security owing to its usefulness in military applications;9 quantum computers,with their enhanced computing power,could be applied to AI algorithms to more efficiently analyze the vast datasets required by machine learning.10 In a more direct application,future qua

33、ntum computers will almost certainly be able to break the cryptographic schemes that currently protect private data.11 Several dual-use capabilities exist when it comes to quantum communications.First,quantum key distribution,which is already available,relies on quantum properties to encrypt data up

34、on transfer.This method of encryption is made“theoretically.impenetrable”during transmission by utilizing quantum entanglementhowever,this is still“an area of very active research,”and vulnerabilities have been found in the nascent system.12Quantum sensing is regarded as the most mature field for mi

35、litary application.According to the Congressional Research Service,quantum sensing could“provide alternative positioning,navigation,and timing options that could in theory allow militaries to continue to operate at full performance in GPS-degraded or GPS-denied environments.”It also has highly usefu

36、l applications in the field of intelligence,surveillance,and reconnaissance.The same report suggests that quantum sensors could help militaries detect“underground structures or nuclear materials,”as well as electromagnetic emissions,greatly enhancing information-gathering operations.13 In addition,q

37、uantum sensing has the potential to upend the“nearly invisible”status of nuclear weaponscapable submarines through advanced underwater detection and tracking abilities.14Quantum Technologies Value ChainThe quantum computing supply chain is globalized;15 firms producing prototypes and products have s

38、everal foreign dependencies.16 Yet suppliers are limited at several points along the quantum supply chain,for two main reasons.First,since quantum technologies are so nascent,the demand for their inputs is very low,which leads to the existence of fewer suppliers.Second,some quantum inputs are incred

39、ibly difficult to produce.17 Since quantum information is fundamentally different from traditional information,new software is needed to connect consumers to QT applications.Thus far,this effort has focused on quantum computing.There are several companies that offer cloud-based access to quantum com

40、puters and have developed software to translate classical computing inputs into ones that can be interpreted by a quantum computer.18Firmwarewhich is best described as the foundational programming written into a hardware device to control its basic functionsis another challenge for quantum computing

41、,to which traditional firmware is not applicable.19 Firmware is essential to any computer,but it also serves a higher purpose in quantum computing:error correction.20 Qubits are prone to error,with a paper from the American Institute of Physics estimating that“the qubit error rate in superconducting

42、 systems is currently around 0.5%”while an error rate above 0.1 percent makes a quantum computer Optimizing U.S.Export Controls for Critical and Emerging Technologies|5ineffective.21 Error correction is one of the great hurdles in quantum computing,and research is mostly conducted in academic settin

43、gs.Scientists from universities in both China and the United States are reported to be making significant progress on the issue.22 In 2021,U.S.-based firm Honeywell claimed it was able to perform quantum error correction“in real time.”23 Previous solutions had aimed at correcting quantum information

44、 after a procedure had been run.According to a RAND Corporation report,the supply chain of QT inputs flows mostly through Europe,with additional components coming from Canada,Russia,Australia,Northeast Asia,and Southeast Asia.Lasers and electronics are the primary items that come from these regions.

45、24 Critical junctures in the supply chain include TOPTICA Photonics in Germany and MOGLabs in Australia,which produce laser diodes;25 Low Noise Factory in Sweden,which produces high-electron-mobility transistor amplifiers;26 and a handful of companies in Finland,the United Kingdom,and the Netherland

46、s that produce the incredibly powerful dilution refrigerators necessary for quantum computers to function.27 The Dutch company ASML also features in the quantum supply chain,with advanced photolithography systems being critical to quantum inputs.28China is heavily involved in the quantum supply chai

47、n,but mostly through commercial off-the-shelf(COTS)components such as electronics,optics,raw materials,and converters.This role is due to competitive pricing and not a unique technological advantage.29 According to a U.S.Government Accountability Office report on quantum computingwhich noted Chinas

48、dominance over rare-earth components of QT and communications technologiesChina“accounted for 80 percent of U.S.imports of rare earth elements between 2016 and 2019.”30The aforementioned RAND reportwhich analyzed many lines of evidence,including patent applications,venture capital funding,and demons

49、trated abilityfound that the United States and China are the global leaders in QT research in each of the three domains.31 The two world powers have slightly different research priorities,with the United States leading in quantum computing and sensing and China leading in quantum communications.Thes

50、e differences are associated with research and development(R&D)funding.Research in the United States is driven by private firms,the vast majority of which are focusing on computing.Chinese R&D is conducted almost exclusively in government-funded laboratories,which have demonstrated rapid progress du

51、e to unmatched investments into quantum communications technology.32 In terms of collaborative academic research in all three quantum areas,U.S.and European universities tend to dominate the share of highly cited research publications.However,scientists from a handful of Chinese institutionsmost pro

52、minently Tsinghua Universityhave collaborated with U.S.and European teams to publish jointly.33 Overall,the current state of the QT sphere can be characterized by U.S.and Chinese leadership,with supply chains relying on firms located within the European Union.William Reinsch,Thibault Denamiel,and Ma

53、tthew Schleich|6Figure 1:Major Players in the QT Supply ChainSwedenUnited KingdomDilution refrigeratorsOXFORD INSTRUMENTSHigh electron mobilitytransistor amplifiersLOW NOISE FACTORYDilution refrigeratorsLEIDEN CRYOGENICSOptical lithography toolsASMLNetherlandsLaser diodesTOPTICA PHOTONICSLaser diode

54、sVARIOUSDielectric glass windowsSCHOTT UGermanyDenmarkDilution refrigeratorsBLUEFORSFinlandSource:Edward Parker et al.,An Assessment of the U.S.and Chinese Industrial Bases in Quantum Technology(Santa Monica,CA:RAND Corporation,2022),https:/www.rand.org/pubs/research_reports/RRA869-1.html;U.S.Govern

55、ment Accountability Office,Technology Assessment:Quantum Computing and Communications(Washington,DC:GAO,October 2021),https:/www.gao.gov/assets/gao-22-104422.pdf.JapanBlue gallium nitride laser diodesNICHIACablesCOAX CO.200 mm sapphire wafersKYOCERA200 mm sapphire wafersVARIOUS SUPPLIERSRussiaChinaC

56、onsumer of-the-shelf items(electronics,converters,raw materials)Optimizing U.S.Export Controls for Critical and Emerging Technologies|7Figure 2:Number of QT Start-Ups by Country(Selected States)United StatesEU member statesIsraelCanada72205United KingdomSwitzerland22154289Quantum computin

57、g start-upsQuantum communications start-upsQuantum sensing start-upsJapan142182162Russia12IndiaSingapore231China9163AustraliaSource:McKinsey and Company,Quantum Technology Monitor(New York:McKinsey,April 2023),https:/ Reinsch,Thibault Denamiel,and Matthew Schleich|8Countries are beginning to embed s

58、ignificant investments and economic guardrails into their QT capacity development strategies.On May 4,2022,the Biden administration released its landmark National Security Memorandum on Promoting United States Leadership in Quantum Computing While Mitigating Risks to Vulnerable Cryptographic Systems

59、.It specifically calls for the United States to“maintain a competitive advantage”on quantum computing and quantum information science.34 Several months later,the CHIPS and Science Act was signed into law,containing several tools to help enact the administrations vision.These include greatly enhanced

60、 funding by the Department of Energy in new initiatives:the Quantum Network Infrastructure R&D Program,the Quantum User Expansion for Science and Technology Program,and the Computational Science Graduate Fellowship Program.U.S.funding also aims to expand the scope of quantum research by the National

61、 Institutes for Standards and Technology and revamp of the National Science Foundations quantum activities,enhancing its ability to educate future quantum leaders.35 In addition to investments,the U.S.government is institutionalizing barriers against countries of concern.In September 2023,the Depart

62、ment of Commerce announced its final guardrails framework for the CHIPS Act,clarifying that funding cannot be utilized to benefit“countries of concern.”Semiconductors“designed for quantum information systems”feature among the restricted technologies.36 This policy,though minor,could be an indication

63、 of the departments future desire to prevent QT inputs from reaching China in a way that mirrors semiconductor export controls.Figure 3:Amount of Public Investment in QTs by Country(Selected States)Source:McKinsey and Company,Quantum Technology Monitor(New York:McKinsey,April 2023),https:/ its part,

64、has implemented policies clarifying that QT development is also of utmost importance.President Xi Jinping has identified quantumalong with space capabilities and AIas a critical strategic technology.37 As discussed above,China invests far and away the most government funds in QT;McKinsey has observe

65、d that this investment has“spurred the development of a dozen Chinese research institutions for quantum technologies.”3802RussiaIndiaCanadaUnited KingdomJapanUnited StatesEU member statesChinaUSD billions$15.3$8.4$3.7$1.8$1.3$1.1$1.0$0.7Optimizing U.S.Export Controls for Critical and Emer

66、ging Technologies|9As explained in the first report of this series,quantum technologies are too nascent to be suitable for export controls.Targeted outbound investment curbs,teed up in the Biden administrations Executive Order on Addressing United States Investments in Certain National Security Tech

67、nologies and Products in Countries of Concern,should be used sparingly so that they do not strangle a U.S.and allied quantum industry that may well already be behind China in at least some areas.Paradoxically,quantum technologies are so nascent that chokepoints are more easily identifiable in this e

68、merging field than some others with more matureand geographically variedvalue chains.Items such as laser diodes,dilution refrigerators,and optical lithography tools remain in the hands of a few companies located in countries with which the United States shares a robust relationship.39 The United Sta

69、tes should therefore keep a constant dialogue with these nations and firms to build capacity and coordinate possible future export curbs once the technology is more established.Given the industrys nascence,the U.S.government should focus on ramping up domestic QT capacity.A key aspect of these effor

70、ts will be to train and attract skilled workers in the sector.SemiconductorsA semiconductor is a material that is conducive to electricity but not as strongly as traditional conductors such as copper.40 The electrical resistivity of a semiconductora measure of how well a material allows an electric

71、currentcan be tampered with,allowing engineers to cut off or reactivate a current at will.41 This unique property has made semiconductor devices(often referred to as just“semiconductors”)the building blocks of the modern world of computing.A“computer chip”(a term used interchangeably with“semiconduc

72、tor”)contains a semiconducting material upon which large numbers of individual transistors exist.Each transistor acts as an individualized semiconductor device with its own controllable electrical resistivity.42 The more transistors a chip contains,the greater its computing power.Since the size of c

73、hips inhibits efficiency,scientists have sought to make smaller and smaller transistors to increase the total potential transistor count on each chip.Todays leading-edge semiconductors have a transistor size of 2 to 3 nanometers(nm),and they are capable of powerful computing tasks.43 Semiconductors

74、have a substantial variety of end uses.Less complex chips are used in everyday electronics like kitchen appliances,cars,medical devices,and basic consumer electronics such as headphones.Leading-edge chips,on the other hand,are being utilized in areas such as advanced computing,AI,fifth-generation(5G

75、)telecommunications,self-driving cars,and the newest smartphones.Chips can also be found in modern military equipment such as precision-guided missiles and uncrewed aerial vehicles.A 2022 CSIS analysis posits that“all major U.S.defense systems and platforms rely on semiconductors for their performan

76、ce”and that modern militaries will continue to demand greater quantities of cutting-edge chips as they incorporate AI into their arsenal of tools.44 The U.S.Critical and Emerging Technologies List contains“semiconductors and microelectronics”as a category.Howeverhighlighting the universal importance

77、 of semiconductorsevery other category defined on the list also relies on advanced chips.45 Given the worrying dual-use nature of chips,Washingtons policy regarding leading-edge semiconductors is to build a sizable capability William Reinsch,Thibault Denamiel,and Matthew Schleich|10gap between the U

78、nited States and its strategic adversaries.On September 6,2022,U.S.National Security Advisor Jake Sullivan called for export control policies to help the United States“maintain as large of a lead as possible”in areas such as“advanced logic and memory chips.”46 DESIGNSemiconductor supply chains are h

79、ighly complex and global in nature.For leading-edge semiconductors,the supply chain has several chokepoints since advanced manufacturing machinery and methods are concentrated in just a few firms.The first stage of the semiconductor manufacturing process is chip design,when firms plan the physical m

80、akeup of a chip,optimizing its features for different objectives.47 Early computer chips,which had transistor counts in the thousands,were designed by hand,but todays leading-edge chips require specialized electronic design automation(EDA)to model the vast complexities of designs with microscopic tr

81、ansistor sizes.48 This software is difficult to make and requires the niche knowledge of specialists,who develop and optimize semiconductor designs for use in different processes and technologies by modeling the 3D designs of integrated circuits,which are then incorporated into the chip upon manufac

82、ture.49 Integrated circuits are designed differently for their different purposesa chip that allows a smartphone to connect to a 5G network will look and function differently than one that processes data related to machine learning.EDA software allows chip designers to model and simulate these diffe

83、rent designs.Increasingly,AI has become a critical component of EDA.Chip designers trialing AI-enhanced tools have been able to design chips more quickly and efficiently than humans can on their own.According to Deloitte Insights,market growth for advanced AI tools for chip design is expected to out

84、pace other EDA tools by a factor of two to one.50 Know-how,as it relates to EDA,can be broken down into the expertise required to build EDA systems and the expertise required to utilize them.Because EDA tool development is a relatively niche field with few experts,human capital in the EDA space is a

85、 critical bottleneck in the semiconductor supply chain.51 Know-how in being able to use EDA tools is more common.Chip design engineers number in the hundreds of thousands worldwide.North Americabased integrated-circuit design firms alone employ an estimated 113,000 semiconductor engineers.52 However

86、,the industry has experienced a talent shortage in recent yearsone that may be alleviated by the use of AI-enhanced EDA tools.As AI makes it easier to produce more advanced and efficient chip designs,fewer chip designers will be required to do the same amount of work,reducing demand for know-how in

87、the sector.53 Optimizing U.S.Export Controls for Critical and Emerging Technologies|11Figure 4:Major Players in EDA and Core Semiconductor IPSource:Zeyi Yang,“Inside the software that will become the next battle front in US-China chip war,”MIT Technology Review,August 18,2022,https:/ Reaches 14nm ED

88、A Breakthrough with Other Chinese Chip Firms Preparing for 7nm an 5nm Gizchina,”May 26,2023,https:/ Electronic,“A Guide to Semiconductor IP Core,”January 18,2022,https:/ Saif M.Khan,The Semiconductor Supply Chain:Assessing National Competitiveness,(Washington,DC:CSET,January 2021)https:/cset.georget

89、own.edu/publication/the-semiconductor-supply-chain/.The United States is the strongest country in terms of overall market share for semiconductor design,holding 46 percent of revenue from this field(excluding EDA tools)in 2021.54 South Korea,with firms such as Samsung and SK Hynix,held a 21 percent

90、share of global design revenue;Japan and Europe both held 9 percent;Taiwan held 8 percent,and mainland China 7 percent of global chip-design revenue.55 In terms of“core IP”intellectual property tied to chip designsthe United States and United Kingdom are responsible for 95 percent of global market s

91、hare,while China nets less than 2 percent.56Late 2022 marked a change in the way the United States devised semiconductor export-control policies.Rather than maintaining the conventional“sliding-scale”approachwherein the United States would ideally position itself a few years ahead of its adversaries

92、 in terms of technological capabilitiespolicymakers would try to“maintain as large of a lead as possible.”57 On October 7,2022,the U.S.Department of Commerce released new export regulations that,among other things,blocked Chinas access to U.S.EDA software.58 Chinas own software is not commensurate w

93、ith U.S.alternatives,so this policy shift will restrict Beijings hopes to manufacture cutting-edge chips domestically.However,China does not produce the highly advanced 23 nm semiconductors that modern EDA is built to handle,so Chinese designers can comfortably utilize domestic software for chips wi

94、th slightly larger transistors.59 EDACore IPUnited States Synopsys Cadence Synopsys Cadence SSTGermany Siemens(acquired U.S.-based Mentor Graphics)N/AChina Empyrean Technology HuaweiN/AUnited KingdomN/A ARM Imagination Technologies (United Kingdom/China)William Reinsch,Thibault Denamiel,and Matthew

95、Schleich|12U.S.export controls have also had the effect of spurring Chinese companies to develop high-quality alternatives in the design space.Throughout 2022,Chinese semiconductor design firms,worth a total of 472 billion yuan($66 billion),raised additional capital from the stock market,suggesting

96、domestic growth.60 However,export controls have effectively set back Chinese chip design.Domestic firms will need to invest in developing EDA alternatives for Chinese chipmakers to eventually design on the leading edge.Given the United States dominance of the design portion of the semiconductor valu

97、e chain,shared with major allies such as Germany and the United Kingdom,current export curbs have been formulated soundly.However,Chinese firms have been surprisingly resilient in developing homegrown capacity.As such,the Biden administrations approach of establishing a hard ceiling rather than a sl

98、iding scale may backfire in the future,especially given that the policy still relies on allies who may,down the line,no longer be willing to sacrifice large portions of their national champions revenue to support U.S.policy.This situation highlights,as with other critical and emerging technologies,t

99、he necessity of establishing and institutionalizing a multilateral approach to curbs on advanced chips.FABRICATIONOnce a chip is designed,it must then be fabricated.The inputs to the fabrication process are raw materials and semiconductor manufacturing equipment.Within this step of the supply chain,

100、several types of specialized firms are necessary to bridge the gap between the design and the physical product.When it comes to semiconductor hardware,firms dealing in fabrication materials and chemicals are concentrated in the United States,Germany,Japan,Taiwan,South Korea,and China.61 As of 2021,T

101、aiwan dominated this space with 25 percent of market share,followed by China at 15 percent and Europe at 9 percentthough each of the latter two occupies an important space in raw materials and chemicals,respectively.62 Semiconductor fabrication machinery is another major chokepoint in the supply cha

102、in.Modern integrated circuits are developed on semiconducting material using a process called photolithography,which makes use of light beams to build chips with microscopic transistor sizes.Deep ultraviolet(DUV)lithography is used to sustainably create chips as small as 14 nm.If used at their maxim

103、um potential,DUV lithography machines can create chips at the 7 nm and 5 nm levels,but there is doubt that this method can produce chips at scale given the lower yield.63 Extreme ultraviolet(EUV)lithography is a state-of-the-art technology for creating leading-edge chips at the 7 nm level and below.

104、EUV lithography machines are“entirely unique”to the Dutch company ASML,making it a critical chokepoint when considering export controls.64 Once given the raw materials,chemicals,and machinery,fabricating a chip then requires a manufacturer,known in the sector as a“foundry”or“fab.”There are two types

105、 of foundries:“pure-play,”referring to specialized firms that operate only in the fabrication business and do not sell chips of their own design,and“non-pure-play,”which are firms that provide foundry services but also sell the chips they make.Historically,most semiconductor companies had in-house f

106、oundries.Over time,however,companies found that their foundry capacities did not necessarily align with Optimizing U.S.Export Controls for Critical and Emerging Technologies|13their internal demands.Eventually,in 1987,the Taiwan Semiconductor Manufacturing Company(TSMC)became the first pure-play fou

107、ndry,responsible solely for manufacturing chips designed by other,“fabless”firms.This business model dominates the landscape today.65TSMC is far and away the market leader in semiconductor fabrication.In 2020,the foundry accounted for 45 percent of global sales,trailed by South Korea-based Samsung a

108、t 15 percent,Taiwan-based United Microelectronics Corporation(UMC)at 6 percent,and U.S.-based GlobalFoundries at 5 percent.Chinas largest foundry,Semiconductor International Manufacturing Corporation(SMIC),held just shy of 4 percent of the global market share in 2020.66ASML,the Netherlands-based sup

109、plier of photolithography equipment,is the most important firm in terms of machinery for leading-edge semiconductor fabrication.It is the worlds only producer of EUV lithography machines,which can produce chips with transistor sizes of 7 nm and smaller.67 Although ASML is the only firm producing EUV

110、 devices,many firms can produce slightly less-powerful DUV machines that can reliably make chips with transistors at the 14-nm level.Japanese firms Nikon and Canon,alongside ASML,are leaders in producing DUV lithography machines.68 For DUV lithography machines that can sustainably produce at the 14-

111、nm level,these three firms hold 100 percent of global market share.Although the market for final high-end lithography products is limited to Nikon,Canon,and ASML,many firms manufacture the components for these machines.This market is global but notably includes U.S.firms Lam Research and KLA.69When

112、it comes to manufacturing logic chips,Taiwan,South Korea,the United States,and China hold the main global market share for chips being produced at 14 nm and below.70 In the fourth quarter of 2022,TSMC alone held 58.5 percent of global market share for semiconductor foundries.71 Meanwhile,Chinese fir

113、ms such as SMIC have not had access to the EUV lithography machines produced by ASML due to the Dutch governments denial of an export license.72 As of September 1,2023,the Dutch and Japanese governments further restricted exports of the most advanced DUV machines to China due to U.S.diplomatic effor

114、ts.73 Chinese firms had used such DUV machines,only produced in the Netherlands and Japan,to produce chips at the 7 nm level,as evidenced by SMICs production of a 5G chip for Huaweis Mate 60 Pro.74 Lastly,South Korean firms SK Hynix and Samsung lead the waytrailed by the United States and Chinain fa

115、bricating memory chips.75 Both Korean companies have access to ASMLs EUV lithography machines.76William Reinsch,Thibault Denamiel,and Matthew Schleich|14Figure 5:Major Players in Semiconductor Manufacturing Equipment and FabricationSource:Saif M.Khan,The Semiconductor Supply Chain:Assessing National

116、 Competitiveness,(Washington,DC:CSET,January 2021)https:/cset.georgetown.edu/publication/the-semiconductor-supply-chain/.The U.S.share of the global semiconductor manufacturing market is only 12 percent,down from 37 percent in 1990.77 With funds appropriated by the CHIPS Act,U.S.policymakers hope to

117、 bring a greater share semiconductor fabrication back to the United States.Backed by CHIPS Act funding,five major semiconductor firms have agreed to set up new fabs in the United States.78 Notably,TSMC will set up“Fab 21”in Arizona,which is scheduled to begin producing EUV-enabled 5 nm chips in 2025

118、.79 Samsung Foundry also committed to opening an EUV-enabled fab in Texas,which is also scheduled to open in 2025.80 China has responded to U.S.export controls with its own policies to boost its share in the semiconductor fabrication market.In September 2023,Chinese officials announced a new$40 bill

119、ion state-backed investment fund aimed at ramping up,among other things,semiconductor manufacturing equipment.81 When it comes to fabrication,U.S.deals with Japan and the Netherlands to curb their own exports to China targeted critical chokepoints and hindered its ability to develop leading-edge chi

120、ps.The United States has also worked with South Korea and Taiwan,as they hold an outsized importance FoundriesGLOBAL FOUNDRIESTSMC U.S.LOCATIONSUnited StatesDUV lithographyCANONNIKONJapan28 nm lithographySMEEFoundriesSMICChinaTaiwanMemory chips,leading-edgeOther high-end chip productionSAMSUNGSK HYN

121、IXSouth KoreaEUV lithographyASMLFoundries,leading-edgeTSMCUMCDUV lithographyASMLNetherlandsOptimizing U.S.Export Controls for Critical and Emerging Technologies|15in fabricating advanced chips.However,the U.S.approach may be hurting its own credibility since it is increasingly putting allies in a di

122、fficult positiondenying them the necessary financial capital to continue innovation is as detrimental to national security in the long term as exporting advanced chips to China.Therefore,as with the design stage in the value chain,the United States should both continue and improve upon its multilate

123、ral efforts rather than deal with chip-control issues bilaterally.Given the current efficacy of the chokepoints,the Biden administrations hard-ceiling approachprovided it is properly enforced by all nations involvedneed not be replaced by a return to the status quo.ASSEMBLYAssembly,testing,and packa

124、ging(ATP)of semiconductors follows two business models:in-house services performed by the chipmaker,or outsourced semiconductor assembly and testing(OSAT).Given the lower technical skills required to succeed in this portion of the semiconductor supply chain,companies have historically utilized OSAT

125、firms in developing countries with low labor costs(or set up their own facilities there)in order to reduce prices.Although ATP has historically been characterized as“less technical”than the rest of the semiconductor supply chain,chips on the leading edge require“advanced packaging”to achieve suffici

126、ent performance.82 New ATP technologies and techniques are emerging to accommodate new integrated circuit designs.Overall,the ATP market is dominated by Taiwan(29 percent),the United States(28 percent),China(14 percent),and South Korea(13 percent).For OSAT companies in particular,Taiwan leads with 5

127、8 percent of the market,trailed by China at 21 percent.The major OSAT players are Taiwanese companies ASE and Powertech;Chinese companies JCET,TongFu,and Tianshui;and Singapores United Test and Assembly Center(UTAC).83 Through the CHIPS Act,$2.5 billion has been allocated to various U.S.agencies to

128、establish the Advanced Packaging Manufacturing Program.As semiconductors become more complex,there will be a greater need for advanced packaging,and the United States is looking to use CHIPS Act funding to gain market share.84Given its relative weakness compared to the other leaders in chip assembly

129、(Taiwan and China),the United States should continue to emphasize promotion rather than protection.However,while ramping up domestic manufacturing is a fine objective,it does not need to be the main prong of the United States promotion strategy.Given the recent difficulties that TSMC has encountered

130、 in building an Arizona fabespecially relative to its more successful ventures abroad85the United States should also prioritize maintaining diplomatic ties with Taiwan,along with other large allied players in the assembly phase and other friendly states wishing to ramp up their own ATP capacity.Thes

131、e efforts would be more efficient than simply reshoring to facilitate diversification away from China,which currently dominates this stage of the semiconductor supply chain.BiotechnologyThe term“biotechnology”encompasses a wide range of goods and services underpinned by utilization of living cellsor

132、 the molecules derived from themfor a diverse set of end uses.86 The William Reinsch,Thibault Denamiel,and Matthew Schleich|16field is a blend of biology and engineering aimed at creating useful products and services.In large part,the biotechnology industry can be subdivided into biopharmaceuticals,

133、industrial biotech,agricultural biotech,food biotech,environmental biotech,and bioinformatics.87 Biotechnology has been a recent subject of concern for the Biden administration.In September 2022,the White House released an executive order(EO)to launch the National Biotechnology and Biomanufacturing

134、Initiative.The EO took a familiar shapeit called for the promotion of domestic biotech activity while protecting strategic biotechnologies from being abused by“foreign adversaries and strategic competitors.”88 The specific biotech areas of concern for the United States are spelled out in the 2022 up

135、date to the Critical and Emerging Technology(CET)list:“Nucleic acid and protein synthesis Genome and protein engineering including design tools Multi-omics and other biometrology,bioinformatics,predictive modeling,and analytical tools for functional phenotypes Engineering of multicellular systems En

136、gineering of viral and viral delivery systems Biomanufacturing and bioprocessing technologies.”89Many of these technologies are used for genetic editing,biological datasets,and leading-edge biomanufacturing technologies.The United States has set the goal to lead in these areas and develop standards

137、for their use.Biotechnology makes use of a wide variety of business types,and each has diverse supply chains.Biopharmaceuticals and industrial biotech,for example,require different inputs.For biopharmaceutical companies,the supply chain can be broken down into four stages.First,firms work to gather

138、raw materials and produce the active pharmaceutical ingredient(API)that forms the core of the eventual product.The second step is formulation,where the API is manufactured into a usable product in the right structure and correct dosage.The final two steps are primary and secondary packaging.“Primary

139、 packaging”refers to the materials that are in direct contact with the pharmaceutical product,while“secondary packaging”refers to the consumer-facing outer packaging of the product.The first step of the supply chain,producing APIs,poses a strategic challenge to U.S.biopharmaceutical companies.Becaus

140、e of its comparative advantage on labor costs,China has begun to produce vast quantities of the worlds APIs.90 For example,86 percent of the streptomycinan API used in tuberculosis drugsthat is sold in North America is supplied by Chinese firms.91 This reliance on trade with China is a worry not onl

141、y for supply chain planners,but also for policymakers.Members of Congress have pushed legislation to track API origins and block products with APIs made in China,citing this production imbalance as a threat to national security.92 Indeed,the overconcentration of API production in any single country

142、poses risks to medicinal supply in the event of a negative supply shock.In a dark but unlikely scenario,Beijing Optimizing U.S.Export Controls for Critical and Emerging Technologies|17could limit the export of medicinal goods to the United States in retaliation for Washington increasing restrictions

143、 on imports.93 By contrast,“industrial biotech”which can be defined as the application of biotech for the industrial processing and production of chemicals,materials,and fuelshas a supply chain that is characterized by upstream access to raw materials such as agricultural and waste products.Further

144、downstream,inputs to the“biorefining”processtransitioning the raw biomaterials into useful productsare critical to industrial biotech production.94According to a study by the Center for New American Security,there are several hardware inputs that are critical to the biotechnology sector.Certain type

145、s of manufacturing equipmentspecifically steel fermentation units and microbe chamber technologiesare produced in low enough quantities that they could become supply-chain chokepoints for industrial biotech.Companies producing this equipment are mostly based in the United States;U.S.partners Japan a

146、nd Germany also host firms operating in this market niche.95 Figure 6:Global API Production vs.Consumption(Selected Regions)Source:Frank Lesmeister,Thomas Kwasniok,and Deiter Peters,“A Strategy to Make Pharma Supply Chains More Resilient,”Bain&Company,November 19,2020,https:/ EuropeNorth AmericaAsia

147、 Pacific(excluding China)0%50%40%30%20%10%ProductionConsumption39%12%26%22%19%33%9%21%William Reinsch,Thibault Denamiel,and Matthew Schleich|18The market for genetic data and bioinformatics is global;however,the United States has begun to consider control of citizens genetic data to be a matter of n

148、ational security.In 2018,Congress updated the mandate of the Committee on Foreign Investment in the United States(CFIUS)to include in its jurisdiction“non-passive,non-controlling investments”of firms with“sensitive personal data.”96 Put simply,companies based in countries considered strategic compet

149、itors of the United States would face an uphill regulatory battle with CFIUS in trying to acquire U.S.genetic data.As with semiconductors,AI is increasingly being used as a tool in biotech development and business management.New drugs are being developed using advanced AI and machine learning models

150、.97 These methods speed up the research process and reduce costs by simulating the arduous process of initial exploration.AI can also help pharmaceutical companies optimize clinical trial candidates for more effective drug testing.98 In addition,pharmaceutical and life-sciences companies are integra

151、ting AI into their supply-chain management tools to gain greater visibility into their sources and reduce operational risk.99Biotechnological advances have increasingly been making use of Clustered Regularly Interspaced Short Palindromic Repeats(CRISPR)systems,which are utilized in genetic engineeri

152、ng.According to James Clapper,former director of national intelligence,such genome-editing technologies could pose a security threat because they are low cost and widely available,increasing the potential for their misuse.100The United States is facing a growing talent gap in the various biotechnolo

153、gy industries.101 In the critical field of bioinformatics,this includes a shortage of individuals who are trained in both AI and biological sciences.102 And although U.S.companies remain leaders in international patent production,the relative increase in Chinese biotech patent filingswhich are growi

154、ng at a rate of 18 percent per yearis“cause for concern.”103 Biotech start-up companies are concentrated in regional hubs worldwide,as shown by data from McKinsey.More than 30 percent of global“series A”venture capital funding is received by companies in California,and more than 20 percent by compan

155、ies in Massachusetts;Chinese start-ups,on the other hand,are receiving only a little over 10 percent of such funding.104 This investment activity highlights the entrenched nature of U.S.dominance in biotechnology.As discussed above,a key part of the biopharmaceutical supply chain is the API.Here,dat

156、a from Bain&Company paints a different picture.China accounted for 39 percent of global API production in 2020,compared to Western Europe at 26 percent and North America at 19 percent.Yet Chinese consumers of APIsi.e.,end-product drug sellersonly accounted for 12 percent of global demand,meaning the

157、 other 27 percent produced in China is being exported.105 Chinas biotechnology research efforts have allowed some Chinese corporations to become major players in the biotech areas specified in the U.S.CET list.Shenzhen-based BGI Group,for example,is a global corporation that works on gene sequencing

158、;it operates the China National GeneBank,which collects genetic data from around the world.The U.S.Department of Defense has therefore“listed BGI as one of several Chinese military companies operating in the United Optimizing U.S.Export Controls for Critical and Emerging Technologies|19States.”106 I

159、n March 2023,the Bureau of Industry and Security(BIS)also added BGI to the Entity List,which identifies companies and organizations the Department of Commerce has“reasonable cause to believe”pose a threat to U.S.national security.107 Other major Chinese firms in this sphere include neoX Biotech,whic

160、h seeks to use AI to assist in pre-clinical pharmaceutical design;108 BeiGene,a multinational corporation conducting cutting-edge cancer research;109 and Innovent,a global biotech research firm that has sold multiple products to U.S.-based Eli Lilly for use in the U.S.market.110The Biden administrat

161、ions aforementioned EO on Advancing Biotechnology and Biomanufacturing Innovation for a Sustainable,Safe,and Secure American Bioeconomy argues that it is imperative for the United States to lead in global biotechnology and reduce its reliance on foreign materials and bioproduction.It calls out forei

162、gn sourcing of APIs as a U.S.vulnerability.111 As required by the EO,the Presidents Council of Advisors on Science and Technology submitted a December 2022 report,which recommended balancing“protect and promote”strategies on biomanufacturing with a“strengthened national security position”given that

163、the United Kingdom,European Union,and China are ramping up their biomanufacturing capabilities faster than the United States.On China specifically,the council notes that although the country has very few firms that are globally competitive in the biotechnology market,China is rapidly building capabi

164、lities:Five of the ten largest biotech initial public offerings in 2019 were made by Chinese-based firms.In terms of hard security,China“has positioned itself to become a leader in biobased production;”this“threatens critical U.S.manufacturing capabilities and U.S.national security”by limiting its a

165、bility to set norms.112China has also gone to great lengths to“co-locate AI and biotechnology researchers”with the goal of producing biotech products that make use of combined research efforts.In terms of protein synthesisan area specifically designated in the U.S.CET listChina has seen considerable

166、 growth.Using AI as a force multiplier in applied CRISPR research,Chinas synthetic biotech advances have grown in lockstep with the rest of the worlds know-how.113 Since the mid-2010s,Beijing has been increasingly protective in preventing foreign organizations from accessing biomedical data produced

167、 in China.In 2016,it classified biomedical data as a“national strategic resource”requiring strict export controls.This rule was notably leveraged to shut down a collaboration between Peking University and the University of Oxford.114Biotechnology products are extremely varied,and their manufacture t

168、akes place across the globe.This makes it difficult to identify chokepoints for most biotech applications.Putting curbs on these inputs,given their worldwide availability,would put homegrown champions at a disadvantage and have very limited upsides in terms of protecting national security.When it co

169、mes to biotechnology,the United States should instead focus on protecting the international transfer of data.Controlling data exports,focusing on information critical to national security such as genetic data,is the first step toward protecting populations against biotechnologys military application

170、s.There have already been efforts to prevent illicit data transfers,as seen with CFIUS actions against Chinese firms attempting to gain access to health data collected by U.S.companies.To build on these William Reinsch,Thibault Denamiel,and Matthew Schleich|20initiatives,the U.S.government should th

171、us use export licensing to control the bulk export of certain categories of data.Artificial IntelligenceThere is an absence of common consensus on the definition of AI and related applications worldwide.115 Even so,U.S.policymakers typically use the phrase“artificial intelligence”to refer to“a compu

172、ter system capable of human-level cognition.”116 Meanwhile,EU experts have defined“AI systems”as software(and possibly also hardware)systems designed by humans that,given a complex goal,act in the physical or digital dimension by perceiving their environment through data acquisition,interpreting the

173、 collected structured or unstructured data,reasoning on the knowledge,or processing the information,derived from this data and deciding the best action(s)to take to achieve the given goal.117To the Congressional Research Service,AI systems fall into one of three categories:“narrow AI,general AI,and

174、artificial superintelligence.”Narrow AI systemsthe only type that currently existsperform just the tasks they were trained to do and aim“to augment or replace human operators,freeing them to perform more complex and cognitively demanding work.”General-purpose AI systems,on the other hand,may also pe

175、rform tasks they were not trained specifically to do.Lastly,“artificial superintelligence”describes hypothetical systems with the capacity to“exceed human-level cognition across most tasks.”If AI systems falling into these latter two categories were to be invented,the nature of warfare would change.

176、118 Even so,the United States and other countriesincluding allies,partners,and adversariesare already researching,developing,producing,and/or incorporating narrow-AI technologies into their warfighting machines to maintain,sustain,or gain technological advantage on the battlefield.Although narrow-AI

177、 technologies may not have inherently military end uses,many are ultimately dual-use goods with both commercial and defense applications.119 Thus,according to the Peace Research Institute Oslo,because AI innovations and applications can help develop weapon systems,they“have the potential to shape fu

178、ture conflicts.,such as by increasing the speed with which countries can fight.or by substituting machines for humans in making certain decisions.”120 The AI supply chain encompasses both software and hardware.The former includes intangible algorithms,data,and programs used to build and train AI mod

179、els,while the latter involves the different electronic component parts that produce the computational power needed to run the former.Still,the respective software and hardware that interoperate to function as AI technology are typically“not in themselves defined as AI.”121In 2022,the AI software mar

180、ket was valued at$72.8 billion and estimated to reach$850.6 billion by 2030,with a 36 percent compound annual growth rate(CAGR).122 In particular,the boom in consumer-oriented generative AI programs could see this segment of the industry rise from a market size of$40 billion in 2022 to$1.3 trillion

181、by 2032,growing at a 42 percent CAGR.123Optimizing U.S.Export Controls for Critical and Emerging Technologies|21North America,with the United States leading the way,held 43.0 percent of the AI software market revenue share in 2022,followed by the Asia-Pacific region at 24.5 percent and Europe at 18.

182、5 percent.Key players in the AI software market include U.S.firms Nvidia,Google,IBM,and Microsoft;and Chinese firms Huawei,Baidu,and Alibaba.124Building an effective AI system requires access to large amounts of data and sufficient computing power.Chips,therefore,are the lynchpin to a successful AI

183、industry.As an earlier CSIS analysis succinctly put it,“No chip,no AI.”125 In October 2023,the United States took action to update its rules to control chips used in AI systems.The update retooled the requirements for exporting such chips to China,in theory preventing Chinese end users from receivin

184、g and utilizing high-end chips designed specifically to train large AI models.126 As discussed in the section on semiconductors,U.S.and allied-nation companies dominate in the fields of electronic aided design and semiconductor manufacturing equipment.Together with new export controls,this will make

185、 it difficult for Chinese firms to import the tools needed to boost their domestic AI industryas long as allied nations continue to cooperate.However,Chinas R&D efforts seek to undercut the efficacy of Western export controls.For instance,Huawei is developing an AI chip with similar performance to U

186、.S.-controlled Nvidia chips.127 More worrying for U.S.policymakers,however,is the prospect of Chinese companies undertaking a complete redesign of AI chip architecture.An October 2023 Chinese research paper details a design for a novel“all-analog chip combining electronic and light computing(ACCEL).

187、”The chipwhich is strictly limited to image-recognition AI tasksuses both analog and photonic workflows to gain greater,more efficient computing power.Yet the semiconductor manufacturing equipment utilized is far from leading-edge,with reports suggesting the ACCEL chip would be produced at the 180 n

188、m level.128 Though these chips are not yet in production,they suggest potential problems to the Western export-control regime.Foreign availability of products with similar(or better)quality defeats the purpose of restricting an item;to strike a balance between national security and free trade,releva

189、nt stakeholders should track the development of Chinese alternatives to U.S.and allied-nation AI chips.An emerging approach to controlling remote access to computing power is a know-your-customer(KYC)scheme,which the banking industry has long used to identify the end beneficiaries of financial produ

190、cts and services to ensure compliance with sanctions.BIS has likewise had a KYC policy for years.If applied to cloud computing,a KYC scheme would require companies to identify the end users of“high-risk”AI tools and block their access as necessary.129 However,this approach would also limit access to

191、 AI model developments for companies located in countries considered U.S.strategic allies.There are two major AI inputs best suited for controlsand they are relevant to other technologies discussed in this report.The first one,advanced chips,has been at the heart of the export control policy debate

192、in Washington and abroad,as leading-edge AI chips are key to Chinese capabilities in the sector.If AI chip controls are implemented multilaterally based on Chinas developing capabilitiesa return to a sliding-scale approach rather than the new hard-ceiling onethey could William Reinsch,Thibault Denam

193、iel,and Matthew Schleich|22provide a sound baseline for curbing military AI capabilities.This would mitigate the long-term circumvention and design-out issues the U.S.governments current approach is causing.The second controllable input to AI is data.As explained in the first report in this series,l

194、anguage models for AI are often publicly available.130 The best approach to controlling data exports would come in the form of comprehensive federal legislation;however,given the political difficulties of passing such a package,leveraging the U.S.export-control apparatus may be more achievable in th

195、e short term.Dual-use data flows that feed AI systems can be defined as an input to the technology and thus be added as a category on the Commerce Control List,allowing BIS to designate types of information that could harm long-term U.S.national security interestsincluding commercial data with milit

196、ary applications and genetic data.131 Communications and Networking Technologies“Communications and networking technologies”encompasses a wide range of products and services related to the storage and transmission of digital information.This category is included in the 2021 update to the U.S.CET lis

197、t,encompassing several specified technological areas of concern.132 Within these,two areas of importance are particularly relevant to this analysis:next-generation wireless networks(5G and beyond)and undersea cable networks.The fifth generation of wireless technology represents a leap forward in ter

198、ms of mobile communications networks.Roughly every 10 years,mobile computing power outgrows the wireless technology infrastructure built to support it.At the moment,global networks are transitioning from 4G/4G long-term evolution(LTE)to 5G infrastructure due to an increase in data demand.These netwo

199、rks offer faster download speeds,lower latency,and increased network capacityall of which are necessary to keep up with the current pace of mobile technology.The rollout of 5G networks requires new infrastructure,the construction of which is taking place over a period of time rather than all at once

200、.As global private industry builds this wireless network,government authorities are seeking to mitigate the security risks posed by the changeover.133 By contrast,the undersea cable network is a niche but globalized industry.Physical cable networks run along the ocean floor,connecting continents aro

201、und the world.The history of undersea communications cable networks goes back well over 150 years;the first transatlantic undersea cable was laid in 1858 to provide telegraph communication between the United States and United Kingdom,though it was poorly constructed and was only able to send 732 mes

202、sages before ceasing to function.134 Technology has evolved since then;as of early 2024,the number of active and planned submarine cables totals 574.135 Not limited to transmitting nineteenth-century telegraphs,these cable networks are able to send vast quantities of digital information across conti

203、nents,forming the backbone of the modern internet.In recent years,“hyperscalers,”or outsized users of bandwidth,have drastically raised demand for underwater sea cables.These hyperscalers are mostly U.S.tech firms such as Google,Amazon,and Meta;in some cases,these firms have gotten together to finan

204、ce the laying of“private”cables that carry only their information.136Optimizing U.S.Export Controls for Critical and Emerging Technologies|23INPUTS TO 5GSince 5G networks are being built and utilized simultaneously,5G supply chains can be thought of as two separate entities:deployment supply chains

205、and service supply chains.“Deployment”refers to the firms building out global 5G infrastructure,while“service”refers to the companies that utilize 5G infrastructure to provide wireless connectivity to end users.Developing 5G requires the construction of two major pieces of infrastructure that make u

206、p the Radio Access Network(RAN):macro towers and microcells.137 First,macro towers,sometimes called“macrocells,”are the key nodes at which cellular devices connect to the wireless 5G network.These devices take the shape of large towers,typically deployed higher than surrounding objects to ensure a c

207、lear signal.Macrocells have already been deployed as part of 4G networks,and 5G systems can be retrofitted onto these towers for maximum cost efficiency.Each tower can provide service for miles,making them common in towns and rural areas.138 Microcells,on the other hand,have a smaller range,so are t

208、ypically deployed only in dense urban areas.They are cheaper and much faster to deploy than macrocells.Microcells can also piggyback off macrocell signals,leveraging their immense power.On their own,macro towers have issues operating in cities,as their signals have problems penetrating indoor and me

209、tallic structures.As demand for data has increasedchiefly fueled by 5Gsmall cells have become a crucial and growing piece of hardware.139There are three main components to 5G software.“Core network infrastructure”is the set of base functions that allow the network to function.It is programmed to man

210、age a large volume of connections,reduce latency,and otherwise assure network efficiency.140“Virtualized radio access networks”(vRANs)allow software to replace some hardwarereducing costs and increasing efficiency and flexibility,thus providing for resource scaling due to changes in network demand.1

211、41 Lastly,“baseband unit pooling”is a centralized method of dynamically routing and processing RAN signals for greater efficiency and flexibility.142Using 5G on mobile devices requires a 5G chip,which typically needs to have a transistor size of 7 nm or below given smartphone size and battery power

212、limitations.143 These chips are usually made with EUV lithography machines;they can also be made with DUV lithography machines,the commercial scalability of which is unlikely.144As of 2018,the market for 5G network equipment was dominated by four firms,Europe-based Ericsson and Nokia and China-based

213、 Huawei and ZTE.These companies provide the equipment that enable communication service providers to operate on 5G networks.South Korean company Samsung has also begun to represent a portion of the market in recent years.145In terms of network software,the market is relatively spread out.As noted ab

214、ove,vRANs entail the virtualization of critical tasks that previous generations of network infrastructure performed by hardware.Since the approach increases flexibility and cost efficiency,it is expected that this will become a larger part of the market for 5G deployment.146 Currently,vRAN technolog

215、y is also widely supplied,with software being developed by companies around the world.147 However,it is highly William Reinsch,Thibault Denamiel,and Matthew Schleich|24likely that Swedish firm Ericsson and Finnish firm Nokia will remain the leaders in supplying 5G infrastructure for U.S.deployment.T

216、he 5G services market is spread among a plethora of multinational firms from around the world and is not dominated by any company in particular.148 China Mobile is the largest telecommunications company,with a market capitalization of$185.72 billion in 2023;four U.S.firms trail it very closely in wh

217、at can be considered a competitive international market.149INPUTS TO UNDERSEA CABLESThe undersea-cable supply chain is relatively straightforward.Cables require dry plants(land-based segments of the cable,mostly used to connect the terrestrial system to the underwater segment)and wet plants(the segm

218、ent of the cable that runs underwater from dry plant to dry plant).Firms that seek to finance the construction of an undersea cable must receive permits from the relevant governments and contract a firm to lay the cable and build the connecting dry plants.Maintenance firms are also a key part of the

219、 cable business:Cable owners often contract,at their own discretion,with separate private maintenance companies to do upkeep and repairs on existing cable systems.150 The cable itself is fiberoptic and produced and distributed in a highly globalized and competitive market.Large fiberoptic cable prod

220、ucers are headquartered in the United States,China,Japan,Europe,and India.151The first stage of undersea cable construction is financing the project.Cables are owned by private investors who usually do not physically lay the lines themselves.Telecommunications and technology companies(e.g.,AT&T,Chin

221、a Mobile,Google,and Amazon)instead finance projectseither by themselves or,more often,a consortium of many companiesand then contract with separate firms to construct and lay the cables.While traditional telecom companies represent the vast majority of cable owners,modern U.S.tech firms such as Goog

222、le,Amazon,and Meta are key drivers of new cable construction due to their rapidly growing demand for data transfers.152 Construction of a line requires a large amount of fiberoptic cable to be laid across the seafloor between land-based destinations.The primary components of these cables are polyeth

223、ylene,mylar tape,stranded metal(steel)wires,aluminum water barriers,polycarbonate,copper or aluminum tubing,petroleum jelly,and optical fibers.Within the lengthy cables,there are also repeaters that allow the signals to be carried over vast distances.The cable lines are laid by sailing a ship along

224、the designated route and dropping fiberoptic cable into the ocean.153 The submarine cable installer market is shared by only a few firms.There is clear“big four”in the industry:U.S.-based SubCom,Japan-based NEC Corporation,France-based Alcatel Submarine Networks(ASN),and China-based HMN Tech,formerl

225、y owned by Huawei.154 Between 2019 and 2023,ASN produced the most cable by length,followed by SubCom and then NEC Corporation in a distant third.Between 2024 and 2027,there are several planned cable installation projects:ASN leads the way at seven,followed by NEC Corporation at five,and SubCom and H

226、MN Tech tied with Italian firm Elettra at two each.155 Optimizing U.S.Export Controls for Critical and Emerging Technologies|25Although the bulk of HMN Techs existing cable lines exist in the Indian Ocean and Southeast Asia,its rapidly growing network is increasingly connecting directly to U.S.allie

227、s and partners.For example,it has a small line connecting Baja California to mainland Mexico,one connecting Brazil to Cameroon,and lines that make landfall in France and Italy.156 POLICIES TO CONTROL 5GIn terms of 5G,the U.S.government is working to reduce U.S.consumer dependency on Chinese telecomm

228、unications products.A$1.9 billion“rip-and-replace”program implemented by the Federal Communication Commission(FCC)provides reimbursement and subsidies for organizations that had previously purchased ZTE or Huawei communications equipment and choose to replace it with new infrastructure and services

229、from trusted suppliers.157During the Trump administration,the White House set telecommunications R&D priorities focused on building out technologies for 5G infrastructure.158 The Biden administration,several years later,is also undertaking programs to promote innovation on information and communicat

230、ions technologies.159 However,there is no indication that the United States will become a major player in 5G deployment,nor is there evidence of one U.S.firm emerging as a far-and-away leader in 5G services.FRANCEEGYPTDJIBOUTIPAKISTANINDIAMALDIVESSRI LANKAMALAYSIASINGAPOREBANGLADESHSAUDI ARABIABAHRA

231、INQATARUNITED ARAB EMIRATESOMANFigure 7:Sea-Me-We 6 Undersea Cable,Installed by SubComSource:”Submarine Cable Map-SeaMeWe 6,”Telegeography,February 8,2024,https:/ Reinsch,Thibault Denamiel,and Matthew Schleich|26POLICIES TO CONTROL UNDERSEA CABLESCongress has made a meaningful attempt to implement c

232、ontrols regarding undersea cables.The Undersea Cable Control Act,which passed the House of Representatives in early 2023 and has been referred to the Senate Committee on Foreign Relations,calls for the executive to map the global undersea-cable supply chain and implement export controls that“elimina

233、te the availability to foreign adversaries of goods and technologies capable of supporting undersea cables.”160 Although the bill has not moved forward,it demonstrates an appetite for action on the issue.The Biden administration has taken limited formal action to address cable security.In May 2023,l

234、eaders at a meeting of the Quadrilateral Security Dialogue(Quad)consisting of the United States,Japan,India,and Australiaagreed to the Quad Partnership for Cable Connectivity and Resilience.Though the partnership,the United States committed to putting$5 million toward capacity building and security

235、measures for undersea cables.161 However,although a statement by Quad foreign ministers several months later mentioned this partnership,there has been no actionable update as of January 2024.162 The United States has been more effective at addressing cable security using informal and less-publicized

236、 channels.As detailed in a special report by Reuters,U.S.officials pressured the private financers of the South East AsiaMiddle EastWestern Europe 6(SeaMeWe-6)cablewhich will run from France to Singaporeto switch their contracted cable-laying company from HMN Tech to the U.S.firm SubCom.163 The U.S.

237、government has repeatedly used this move to shape undersea cable contracts,citing security concerns over China monitoring internet traffic.164 The FCC leads the U.S.governments effort to regulate foreign ownership of cables.While the FCC has held this power for decades,recent guidance from the White

238、 House codified an interagency effort to review cables with foreign ownership at the 10-percent level or greater.165 This interagency committee,known informally as“Team Telecom,”has remit well beyond the undersea-cable industry,having revoked telecom licenses for several Chinese-owned wireless provi

239、ders operating in the United States since 2021.166 Private sector trends may have the biggest impact on market shifts.Industry data indicates that hyperscalers such as Google,Meta,Microsoft,and Amazon accounted for 23.5 percent of all new system investment in undersea cables between 2019 and 2023.Th

240、is trend is driven by the increase in cloud storage,which requires connecting large data centers with devices on different continents.167 As far as 5G equipment and deployment are concerned,China has presented itself as a major player in the international market.Since the United States has no major

241、exporters of 5G equipmentopting instead to utilize established market players Ericsson and Nokiaexport controls do not apply.However,Washington has pursued policies that make it difficult for Chinese firms Huawei and ZTE to deploy their 5G equipment in the U.S.market.Apart from sanctions against Chi

242、nese telecom firms,the FCCs rip-and-replace program and various federal R&D programs aim to bolster U.S.security in communications and networking technology.The fabrication of undersea cables is relatively simplerelying on widely available inputs and an easily replicated manufacturing processand the

243、refore global,so implementing export controls Optimizing U.S.Export Controls for Critical and Emerging Technologies|27on U.S.firms would be counterproductive.However,installation of cables is an area where there is both need and opportunity for the United States to erect curbs.HMN Techs potential in

244、stallation of undersea cables means the Chinese firm could potentially be in control of information relevant to the United States or allied nations,giving them tremendous leverage and constituting a major national security threat.However,export controls may not be the best tool to prevent installati

245、on and operation.Instead,curbs on awarding homegrown contracts,as well as sanctions on financing for HMN Techs installations,would be more effective.As discussed above,U.S.sanctions have already successfully blocked HMN Techs installation of undersea cables.However,such maneuvers have led to Chinese

246、 firms seeking to install undersea cables without any U.S.involvement,putting them beyond Washingtons reach.Low-or middle-income countries looking for the least costly alternative could turn to China.This suggests that,along with curbing HMN Techs funding options,the best avenue to limit Chinas unde

247、rsea-cable operations is to ensure that allied nations can also offer affordable financing options to third countries.For instance,in 2018,Australia agreed to front most of the cost of constructing an undersea cable from Sydney to the Solomon Islands and Papua New Guinea,shutting out a competing off

248、er by HMN Tech(then owned by Huawei)and thus limiting Chinas involvement in the regions telecommunications.168 Uncrewed Vehicles Uncrewed vehicles are possibly the highest-profile dual-use items on the contemporary battlefield.Uncrewed aerial vehicles(UAVs)are a type of technology which,although mat

249、ure,has been impacted by the dual-use capabilities of CET on the battlefieldfor instance,AIs enabling of drone swarming.”Understanding how these advanced technologies can impact traditional items on the battlefield,as well as analyzing these traditional items supply chains,is therefore paramount to

250、CET control considerations.For the purposes of this paper,the term“drone,”most commonly associated with UAVs,will also encompass land-and sea-based vehicles that require no physical pilot within the vehicle itself.Drones have evident capabilities in both military and civilian applications.Initially,

251、drone investment was driven by the military,with the U.S.Department of Defense heavily funding R&D in the 1980s and 1990s.169 Famously,in 1995 the United States began using the Predator UAV,an armed medium-sized drone capable of long-term,high-altitude deployment,in support of missions in Bosnia.170

252、 In 2013,after years of policy debate,the first commercial flight of an uncrewed vehicle took place,when ConocoPhillips flew a research drone over the Arctic.Since then,civilian uses for drones have rapidly increased.171Though spending on drones has been historically dominated by militaries,the civi

253、lian drone market is experiencing rapid growth,with a projected 29 percent CAGR for 20222028.As of April 2022,the number of registered drones in the United States was 853,800,more than three-fifths of which are recreational drones,while the rest are registered for commercial use.172The production of

254、 armed drones is a globalized business,ranging from the United States and its allies to countries of concern such as China,Russia,and Iran.The United States,as previously noted,spearheaded armed-drone production during the later years of the Cold War through William Reinsch,Thibault Denamiel,and Mat

255、thew Schleich|28military R&D.The United Arab Emirates(UAE),Israel,and the United Kingdom all began developing drones for military use between 2002 and 2005,followed in 2006 by another six European countries.In the early 2010s,Iran,North Korea,China,and Russia(among others)began developing their own

256、domestic drones.173 One of the most advanced armed Chinese drones is the Chang Hong-4(CH-4),which closely resembles the U.S.-made MQ-9 Reaper.The CH-4 boasts capabilities that match those of other militaries,able to fly at high altitudes for extended periods of time and release guided air-to-surface

257、 missiles at ground targets.174As discussed in a previous CSIS report,it is clear that the export of military end-use drones is widespreadthough the 2021 analysis does not cover recent changes in export behavior due to Russias invasion of Ukraine.There are three major types of military uncrewed aeri

258、al systems(UAS):unarmed,armed,and loitering munitions(drones that crash into a target after identifying it).175 The list of exporters of unarmed UAS is long,with the major players including Israel,the United States,and China;in the decade between 2001 and 2010,Israel had a sizeable lead in export va

259、lue that has since been overtaken by the United States.176Figure 8:UAS Arms Trade Trends Note:Trend Indicator Value,defined by SIPRI,reflects the military capability of an item rather than its financial value.Source:Gregory Sanders et al.,Rising Demand and Proliferating Supply of Military UAS(Washin

260、gton,DC:CSIS,May 2023),47,https:/www.csis.org/analysis/rising-demand-and-proliferating-supply-military-uas.Export value for armed UAS and loitering munitions are even more concentrated within a few nations.While the United States historically exported many armed UAS systems,its market share has fall

261、en significantly as China,the UAE,and Turkey have increased their production,with Unarmed UASArmed UASLoitering MunitionsNumber DeliveredTrend Indicator Value030880308131800.1k0.2k0.3k0.4k050M100M150M200MDelivery YearMeasurementAustriaChinaIsraelPolandTurkeyUAEUnited StatesAll OtherSource

262、:“SIPRI Arms Transfers Database,”SIPRI,June 12,2022,https:/www.sipri.org/databases/armstransfers;CSIS analysis.Optimizing U.S.Export Controls for Critical and Emerging Technologies|29China emerging as the leading exporter.The market for loitering munitions is relatively small in comparison to the UA

263、S systems,but Israel and Poland have formed an exporting duopoly on the technology.(It is important to caveat that this data,while helpful,is imperfect,as it only accounts for reported arms transfers that could be verified by the Stockholm International Peace Research Institute.)177However,export va

264、lue is only half the story.Domestic industrial bases can produce and deliver drones to their respective militaries.Since 2016,the United States has held a noted lead over China and Russia in the production of drones.In addition,the United States is significantly outpacing China and Russia in forecas

265、ted military and commercial demand for uncrewed systems,particularly uncrewed air systems.178Drones are controlled by several U.S.regulatory frameworks.However,these efforts have not worked toand in some cases are not intended tocompletely cut off U.S.adversaries from obtaining or manufacturing dron

266、es.Advanced microelectronics are major inputs to drone technology,and each supply constraint that applies in this papers section on semiconductors dually applies to uncrewed vehicles.However,the point of some controls and sanctions is not to stop every chip(which is impossible anyway)but to disrupt

267、supply chains.179 Some drones can make use of lower-end chips;in fact,as previously noted,drones were put into U.S.military use nearly 30 years ago with far less-advanced technology than todays cutting-edge chips.The case of the Shahed-136,a loitering munitions drone designed to overwhelm air defens

268、es during an attack,illustrates how Western policies make it difficult but not impossible for U.S.adversaries to acquire drone technology.The Russian military has been plagued by a shortage of attack drones as their invasion of Ukraine drags on into a protracted conflict.Since the Russian domestic i

269、ndustrial base does not have as much production capacity as the United States,Moscow is leveraging trade relations with Tehran to fill gaps in supply.Iran has therefore agreed to produce 6,000 Shahed-136 drones for Russia.180 Yet Iran would not be able to manufacture the Shahed-136 without Western i

270、nputs,as 80 percent of the drones electronic components come from the United States;34 out of around 140 total inputs come from U.S.microelectronics manufacturer Texas Instruments alone.181 While Iran and Russia will seek to replace these inputs,there are some critical electronics itemsleft unnamed

271、by this studythat are not yet produced in non-Western countries.Therefore,Russia remains reliant on importing certain materials.In response,the United States has taken extraordinary measures,particularly through BIS,to make it more difficult for U.S.products to end up in the Shahed-136 drones.With i

272、nformation about the drone gleaned from leaked Iranian documents,the United States can potentially enforce controls in this particular instance.182 However,given the limits of enforcement,especially when faced with countries that work through covert supply channels,it is impossible to prevent all il

273、licit acquisitions of drone technology.Nevertheless,in February 2023 BIS implemented expanded export restrictions on relevant products to make it more difficult for Iran to use U.S.technology in manufacturing drones for Russia.183 It is unclear,as of this writing,if the new controls have been succes

274、sful in hampering production of the Shahed-136.William Reinsch,Thibault Denamiel,and Matthew Schleich|30Overall,when it comes to drones,the United States and its allies should focus on controlling access to the leading-edge capabilities in which they still have a clear advantage.The sector has been

275、globalized,and multiple nationsincluding Iran,the UAE,and Chinaare able to manufacture a large portion of the inputs.In some cases,however,inputs critical to making drones as efficient as possible on the battlefield are still the remit of the United States and its allies,as observed in case of the S

276、hahed-136.Western powers should thus focus their control efforts on these items.The uncrewed vehicle industry is both a study in the limits of enforcement,as illicit technology transfers have been particularly rampant in this sector,as well as the importance of multilateral controls.Optimizing U.S.E

277、xport Controls for Critical and Emerging Technologies|31Revamping Multilateral Export Control RegimesNew geostrategic imperatives are rendering institutions from the turn of the millennium increasingly less efficient.The existing multilateral institutions below have their merits but in themselves ca

278、nnot tackle issues posed by the rapid development of critical and emerging technologies.The membership of Russia,which has in the past two years overtly demonstrated that its foreign policy interests run counter to the security and values of the United States and its allies,is hindering the effectiv

279、eness of the consensus-based Wassenaar Arrangement.Meanwhile,key players in todays critical and emerging technologies are missing,such as Taiwan.In addition,the institution does not have the means to tackle a growth in digitization,as it was largely built for a hardware era and is not sufficiently g

280、eographically focused to counter the rise of China.The consensus-based nature of Wassenaar Arrangement decisionmaking,which takes into account every voice in the arrangement regardless of the countrys role in a technologys supply chain,also makes for a long,arduous process that is not fit for the pa

281、ce of CET evolution.Similar arrangementsthe Nuclear Suppliers Group,Australia Group,and Missile Technology Control Regimeare too narrow in scope and membership to be appropriate avenues to coordinate allied export control policies on critical and emerging technologies.Existing Multilateral Export Co

282、ntrol RegimesWASSENAAR ARRANGEMENTThe Wassenaar Arrangement is a comprehensive multilateral export control regime created in 1996 to coordinate restrictions on conventional arms and dual-use goods.The 42 members agree William Reinsch,Thibault Denamiel,and Matthew Schleich|32to periodically disclose

283、if and where they have exported various items detailed on the List of Dual-Use Goods and Technologies and the Munitions List.184 The regularity of the disclosures depends on the item.For tier-one(basic)items on the dual-use list,as well as all items on the Munitions List,members must report their ex

284、port denials twice a year.For tier-two(sensitive and very sensitive)items,members must notify the Wassenaar Secretariat of any license denials within 60 days and of any approvals that are“essentially identical”to a license another member has denied within the past three years.By doing so,members aim

285、 to“prevent destabilizing accumulations”of these technologies and dual-use goods by countries of concern.185 Of the multilateral export control regimes,the Wassenaar Arrangement is the widest-ranging in terms of the items that are controlled.In addition to the“sensitive”and“very sensitive”classifica

286、tions,the dual-use list includes tier-one items in the following categories:special materials and related equipment;materials processing;electronics;computers;telecommunications and information security;sensors and lasers;navigation and avionics;marine;and aerospace and propulsion.Items are added an

287、d subtracted from the list on a consensus basis.186 The Wassenaar Arrangements 42 members include Argentina,Australia,Austria,Belgium,Bulgaria,Canada,Croatia,Czechia,Denmark,Estonia,Finland,France,Germany,Greece,Hungary,India,Ireland,Italy,Japan,Latvia,Lithuania,Luxembourg,Malta,Mexico,the Netherlan

288、ds,New Zealand,Norway,Poland,Portugal,Romania,Russia,Slovakia,Slovenia,South Africa,South Korea,Spain,Sweden,Switzerland,Turkey,Ukraine,the United Kingdom,and the United States.187 Since the invasion of Ukraine,Russias membership has becoming increasingly contentious.Notable absences from the group

289、include China,Belarus,Pakistan,and Israel.NUCLEAR SUPPLIERS GROUPThe Nuclear Supplies Group(NSG)is a multilateral export control regime that creates guidelines for the export of nuclear materials and technologies with the aim of stopping nuclear proliferation.Part I of the guidelines for members art

290、iculates best practices for exporting fissionable materials,nuclear reactors and equipment,and reprocessing and enrichment equipment.188 Part II lists best practices for the export of dual-use goods such as machine tools and lasers.The guidelines are not legally binding;rather,members are expected t

291、o incorporate them into their national laws.189 Members are required to share license denials with the group so that other members also deny the license if the same request is made of them.The following member countries meet once a year to update its guidelines:Argentina,Australia,Austria,Belarus,Be

292、lgium,Brazil,Bulgaria,Canada,China,Croatia,Cyprus,Czechia,Denmark,Estonia,Finland,France,Germany,Greece,Hungary,Iceland,Ireland,Italy,Japan,Kazakhstan,Latvia,Lithuania,Luxembourg,Malta,Mexico,the Netherlands,New Zealand,Norway,Poland,Portugal,Romania,Russia,Serbia,Slovakia,Slovenia,South Africa,Sout

293、h Korea,Spain,Sweden,Switzerland,Turkey,Ukraine,the United Kingdom,and the United States.190 Notable omissions from the group include India and Pakistantwo countries with nuclear capabilities.Both have submitted bids to join but have been denied because they are not signatory to the Non-Proliferatio

294、n Treaty.191Optimizing U.S.Export Controls for Critical and Emerging Technologies|33AUSTRALIA GROUPThe Australia Group is a multilateral export-control regime that aims to limit the supply of chemical and biological weapons through coordinated restrictions.Like the NSG,members are expected to incorp

295、orate guidelines into their national export-control laws,as detailed in the Chemical WeaponsRelated Common Control Lists and the Biological WeaponsRelated Common Control Lists.These lists can be further divided into five categories:(1)chemical weapons precursors;(2)dual-use chemical-manufacturing fa

296、cilities,equipment,and related technology;(3)human and animal pathogens and toxins;(4)plant pathogens;and(5)dual-use biological equipment and related technology.192 Memberswhich notably do not include Russia,China,or Israelmust deny an export license when there is“a concern that the items might be u

297、sed in a CBW chemical or biological weapons program.”193MISSILE TECHNOLOGY CONTROL REGIMEThe Missile Technology Control Regime(MTCR)is a multilateral export-control regime that“aims to limit the spread of ballistic missiles and other uncrewed delivery systems that could be used for chemical,biologic

298、al,and nuclear attacks.”194 MTCR members are expected to incorporate the guidelines from the MTCR Annexwhich covers“virtually all key equipment,materials,software,and technology needed for missile development,production,and operation”of weapons of mass destructioninto their national export control l

299、aws.195 Category I items include rockets and military-grade UAVs,exports of which are“subject to an unconditional strong presumption of denial regardless of the purpose of the export,”whereas Category II includes dual-use items that are less strictly regulated.196 Members include“most of the worlds

300、key missile manufacturers”but notably not Iran,North Korea,or Pakistan,each of which is actively expanding its missile program.197A Critical and Emerging Technologies Regime SCOPEInherent to issues surrounding critical and emerging technologies is that they are constantly in flux.The definitions of

301、both“critical”and“emerging”are drastically different now from what it was three decades ago,and it is likely to change just as drastically in the future.The scope of a CET regime should therefore not be defined according to rigid rules,but rather open to amendments based on the security imperatives

302、of the time.In addition,nations working together on CET would miss an opportunity if they developed a regime solely to institute export controls multilaterally.Altogether,there are three issues key to the“promote and protect”idea expressed by allied nations as they consider approaches to these techn

303、ologies:governance and rules of usage,capacity development,and technology transfers.While the focus of this paper is on export controls,the purpose of a regime should go beyond the issue and enhance coordination on all these major facets of CET.A holistic approach would guarantee both a more united

304、front on national security and more technological advances to further economic prosperity around the globe.Thus,a new multilateral export control regime is not strictly what is recommended here,but rather a new multilateral Regime on Critical and Emerging Technologies(R-CET).Holding committees withi

305、n one regime also enables policymakers to consider how mature technologies making a difference on the battlefield,such as UAVs,can be impacted by CET control decisions.William Reinsch,Thibault Denamiel,and Matthew Schleich|34MEMBERSHIPWhile the Group of Seven(G7)has been a sound venue to formulate i

306、nitial multilateral efforts toward economic security,critical and emerging technologies require a more expansive set of members to be effective.Countless examples apply.The northern European nations are critical potential chokepoints for quantum technologies because of their role in developing relat

307、ed refrigeration and cooling techniques.India is going to be increasingly relevant to ramping up capacity in the semiconductor sector,especially as allied nations aim to diversify away from China.South Korea is important to a large swath of current CET supply chains,chief among them chips.Membership

308、 in the R-CET should be defined by two factors,in addition to a broad sense of allyship on the international stage:whether allied nations have a sizeable role in different CET supply chains and whether these allied nations are set to play a future role in capacity building,including downstream.After

309、 establishing an initial regime,membership can be offered to additional nations by consensus.FRAMEWORKAs stated above,the R-CET would encompass three essential issues related to critical and emerging technologies.It would thus be divided into three pillars,each devoted to one of the following:govern

310、ance and rules of usage,capacity development,and export curbs.Governance and rules of usage:The governance pillar would set baseline guidelines for both public and private entities on how to engage these technologies,defining the dos and donts of each.AI is a perfect example of the challenge at hand

311、 and has already been addressed,in some cases,by domestic governments.The Biden administration released its EO on the Safe,Secure,and Trustworthy Development and Use of Artificial Intelligence,which“establishes new standards for AI safety and security,protects Americans privacy,advances equity and c

312、ivil rights,stands up for consumers and workers,promotes innovation and competition,advances American leadership around the world,and more.”198 Likewise,the European Union is moving forward with its own Artificial Intelligence Act,which similarly aims to set standards of use for the technology.199 T

313、he United Kingdom has also been acting on AI standards,as shown by the AI Safety Summit it hosted in November 2023.200 While nations have aimed to coordinate efforts in governance,the push has been scattered and dependent on bilateral action to bear fruit.The R-CETs governance pillar would provide a

314、n avenue to coordinate multilateral action on relevant issues such as protecting against AI-enabled misinformation or weapons engineering.Capacity development:The second supply chain pillar of the R-CET would allow member nations to formulate concrete strategies to scale up their capabilities in dif

315、ferent technologies.This would enable nations to coordinate domestic,state-led investments and avoid duplications or inefficiencies in subsidies.R-CET membership would also be a way to receive exemptions from the domestic manufacturing requirements that seem increasingly commonplace in large nationa

316、l subsidy packages.In tandem,the R-CET would enable nations investing in critical and emerging technologies to coordinate potential national-security guardrails against countries and entities of concern benefiting from the funds.Optimizing U.S.Export Controls for Critical and Emerging Technologies|3

317、5Export curbs:As countries consider moving away from the Wassenaar Arrangement,several options present themselves as potential avenues for controlling exports.The first is a“Wassenaar minus one”framework,wherein the group would be restructured without the membership of Russia,which has been hinderin

318、g its operations and is likely to continue to do so for the foreseeable future.While this would solve one of the main issues with the arrangement,several obstacles remain.Chief among them,as discussed above,is the lengthy decisionmaking process unfit for the quick pace of change inherent to critical

319、 and emerging technologies.In addition,the Wassenaar Arrangements broad scope does not allow for a sharper focus on these new technologies,which are set to play an outsized role in tomorrows security landscape.Another potential avenue would be to set up a series of mini sectoral regimes,each dedicat

320、ed to a specific type of CET.The membership would be more limited,the decisionmaking likely more streamlined,and the expertise provided by each contributing party more specialized than in a general regime.However,this pathway also has several flaws.First,from a logistics perspective,it might be diff

321、icult for nations with multiple memberships to staff each regime.The issue would grow as different types of CET that have not yet been developed become more relevant to national security and require their own mini regime.Diplomatically,establishing a multiplicity of regimes would present tremendous

322、challenges;setting up a large number of multilateral organizations would take an impractical amount of negotiating time and effort.In addition,organizing a set of independent mini sectoral regimes would ignore a key feature of CET:many technologies are intertwined and deserve a control framework con

323、ducive to conversation among experts and decisionmakers in different sectors.For instance,advanced semiconductors are a key input for AI,and AI capabilities contribute to advances in biotechnology.In some cases,controlled inputs could be the same or very similar for different CETs.The transfer of da

324、ta is relevant both to controls on AI and biotechnology.Lastly,ensuring that export curbs considerations remain within one regime would also enable policymakers to understand how mature technologies that make a difference on the battlefield,such as UAVs,can be impacted by different CET control decis

325、ionsThe controls pillar of the R-CET would aim to mitigate these issues by adopting a hybrid framework.All the countries that are part of the R-CET would be included in the pillar itself,but it would also be divided into sectoral committees in which only members deemed to be critical to the supply c

326、hain of that technology would have a vote regarding controls.All countries in the R-CET would be invited to all meetings of the individual committees and be able to voice their opinions and voice their expertise,but major stakeholders would vote by consensus.Nations could be added to a committee by

327、consensus of the current voting members;moreover,committee members would have the ability to remove another member nation by consensus vote(minus the country in question).The committee votes would be binding decisions for R-CET members.Given the supply chain analyses in the previous sections,the sec

328、toral committees for the technologies examined in this paper might look like what is outlined in Table 1.This would make for a more efficient decisionmaking process wherein major players for a particular CET are in control but views of allied nations within the R-CET at large would also be considere

329、d.Much like the broader R-CET,membership of the committees could be expanded by consensus of the voting members.William Reinsch,Thibault Denamiel,and Matthew Schleich|36Table 1:Hypothetical Sectoral Committees of R-CETSectorU.S.Partners and Allies with Significant Sectoral InvolvementQuantum Technol

330、ogies United States Germany Finland The Netherlands Sweden Japan Australia Canada United Kingdom India SwitzerlandSemiconductors United States United Kingdom South Korea Taiwan The Netherlands Japan GermanyAI United States Israel Other countries represented in the semiconductor supply chainCommunica

331、tions and Networking Technologies United States France Sweden Finland Other countries represented in the semiconductor supply chainBiotechnology United States Japan Germany France Switzerland South Korea CanadaSource:Authors analysis.Optimizing U.S.Export Controls for Critical and Emerging Technolog

332、ies|37ConclusionThe immediate post-Cold War era is over,and now a period of intense competition between the United States and China is underway.At the heart of this competition is the race for critical and emerging technologies,which are set to transform national economies and the national-security

333、landscape of the twenty-first century.They will change the way battles are fought;they will change the way economies grow.These technologies will not only define the worlds most important bilateral relationship,but the world stage writ large.The protection of national capabilities in these sectors will be a key feature of U.S.foreign policy.How to manage technology transfers across borders has alr