1、Optimizing Export Controls for Critical and Emerging TechnologiesSemiconductors,Quantum Technology,AI,and BiotechnologyAUTHORSWilliam A.ReinschEmily BensonThibault DenamielMargot PutnamMAY 2023A Report of the CSIS Scholl Chair in International BusinessOptimizing Export Controls for Critical and Emer

2、ging TechnologiesSemiconductors,Quantum Technology,AI,and BiotechnologyAUTHORSWilliam A.ReinschEmily BensonThibault DenamielMargot PutnamMAY 2023A Report of the CSIS Scholl Chair in International BusinessII|Optimizing Export Controls for Critical and Emerging TechnologiesAbout CSIS The Center for St

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

4、ed in 1962,CSIS is led by John J.Hamre,who has served as president and chief executive officer since 2000.CSISs purpose is to define the future of national security.We are guided by a distinct set of valuesnonpartisanship,independent thought,innovative thinking,cross-disciplinary scholarship,integri

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

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

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

8、venue,NWWashington,DC 20036202-887-0200|www.csis.orgIII|William A.Reinsch,Emily Benson,Thibault Denamiel,and Margot PutnamAcknowledgmentsThis report is made possible through generous support from the Smith Richardson Foundation.The authors would also like to thank the numerous current and former gov

9、ernment officials who agreed to be interviewed for this project,as well as private sector experts who provided their valuable input.IV|Optimizing Export Controls for Critical and Emerging TechnologiesContentsIntroduction 1National Security 5Critical Technologies 12Recommendations 32Conclusion 35Abou

10、t the Authors 37Endnotes 391|William A.Reinsch,Emily Benson,Thibault Denamiel,and Margot PutnamIntroduction“The post-Cold War world has come to an end,and there is an intense competition underway to shape what comes next.And at the heart of that competition is technology.Technology will in many ways

11、 retool our economies.It will reform our militaries.It will reshape the lives of people across the planet.And so its profoundly a source of national strength.”Secretary of State Antony Blinken,October 20221 Today,the United States strategic technology framework faces new challenges.It must contend w

12、ith multiple adversaries,including China,and it is being challenged in both the security and economic realms.The importance of exports to U.S.economic growthparticularly in the information and communications technology(ICT)sectorhas also complicated trade and security policy.If controls are too loos

13、e,U.S.adversaries gain technology they can use against the United States;if they are too tight,the United States starves its high-tech companies of the revenue they need to develop next-generation products.The United States is already rethinking its long-term strategy toward China,knowing there is a

14、n increasingly small window of opportunity to effectively counter Chinese strategic technology goals.With technological advancements such as faster machine learning,smarter supercomputing,and more durable autonomous weapons,speed of innovation and the ability to scale up production are important.Add

15、itionally,in the wake of the Russian invasion of Ukraine,the United States now needs to avoid actions that would push China and Russia closer together.Given the importance of maintaining U.S.technological superiority and responding to Chinas ambitions,it is important to envision what a new strategic

16、 technology framework should look like.2|Optimizing Export Controls for Critical and Emerging TechnologiesThe United States post-World War II export control structure began in 1949 as a result of the Cold War.When the Export Control Act became law that year,its three main purposes were to protect th

17、e domestic economy,advance U.S.foreign policy interests,and control sensitive exports to enhance national security.The initial concept was simple:the United States and its allies in the North Atlantic Treaty Organization wanted to prevent the Soviet Union from acquiring critical dual-use technology

18、that would benefit their military.To do so,they set up an export licensing system that required allied permission to export sensitive items.There was broad agreement on the goal and,in the early years,a surprising degree of operational consensus among the participating countries.Enforcement was stra

19、ightforward.The items subject to control were,for the most part,physicalif not manufactured products,then intellectual property embodied in blueprints or schematicsand,if necessary,they could be stopped and inspected at the point of departure.Over the past 30 years,following the collapse of the Sovi

20、et Union,the United States has transitioned to a control system based largely on end-user analysis rather than the broader approach used with the Soviet Union,though the latter has not disappeared entirely.To implement an approach based primarily on determining the bona fides of end users,the Depart

21、ment of Commerces Bureau of Industry and Security(BIS)issues export licenses that include conditions that might,for example,only allow specified users engaging in specified activity to use the exported item.Further,in 2018,Congress replaced the long-expired Export Administration Act(EAA)with the Exp

22、ort Control Reform Act of 2018(ECRA),which updated the law and made it more relevant to post-Cold War conditions.2 There are two policy elements that have proved difficult to reconcile over the past 30 years:ensuring military capability and national security versus maintaining an economic advantage.

23、The law permits controls to protect the former but not the latter,although the latter clearly impinges on the former.In seeking to protect U.S.national security interests,the government is controlling technologies that would incrementally improve foreign adversaries military capabilities,including t

24、heir proliferation capabilities and missile delivery systems;however,those controls also have commercial implications,since the items in question often have both civil and military applications.That is particularly true with respect to semiconductors and emerging technologiessuch as quantum technolo

25、gy and artificial intelligence(AI)which are rapidly changing the nature of warfare and can help foreign adversaries enhance their military capabilities more quickly.That places a greater burden on regulators to make faster judgments as well as to take into account broader impacts on the civilian eco

26、nomy.The United States needs to define more clearly what merits control and what does not.That means designing a policy that permits the growth of industries that do not aid foreign military capabilities,while controlling items that could harm U.S.national security.The government must take care to f

27、ocus on goods and technology that are essential to U.S.national securityrather than imposing controls on items with minimum security significance,which are deemed vulnerable simply because they are made elsewhere.Autarky,or self-sufficiency,is an unrealistic goal in a globally integrated economy,and

28、 efforts to achieve it will only result in excessive controls that impose economic costs without enhancing security.Control Considerations Inadequate controls spur U.S.adversaries technological progress and encourage proliferation.They also reduce the ability of the U.S.government to gain insights i

29、nto the destination and end uses of domestically-produced technology.Failure to control dual-use technologies is particularly problematic given Chinas ongoing pursuit of its civil-military fusion strategy as well as its theft of intellectual property which had thus far enabled the West to maintain a

30、 technological edge.Revelations that Chinese-based Semiconductor Manufacturing International 3|William A.Reinsch,Emily Benson,Thibault Denamiel,and Margot PutnamCorporation(SMIC)has achieved the ability to produce 7-nanometer semiconductors highlight the challenge Western export control policymakers

31、 face in trying to restrain,let alone degrade,Chinese military capabilities.3 This makes it even more essential for the U.S.government to reassess its current export control regime and consider how it can more effectively tighten controls without stifling U.S.innovation for the next generation of cu

32、tting-edge technology.4 For example,in 2014 the BIS estimated that U.S.industry had lost between$988 million and$2 billion in sales due to export controls from 2009 to 2012.5 As the United States considers additional controls,the burden borne by the private sector is bound to expand.Some elected off

33、icials have advocated a policy of far broader controls where nearly everything is deemed important.This policy would seek to isolate China by selling them nothing with any security implications,but it would also deny U.S.firms access to an important foreign market and the revenue that comes with it.

34、While it is not necessary from a security point of view for the United States to produce t-shirts or eyeglasses,it is vital that the United States maintain the ability to produce semiconductors used in military aircraft and advanced weapons.Deciding what is,and is not,important is the essence of exp

35、ort control policy.The real issues,of course,lie not at the ends of the spectrum but in the middle.An important distinction,which the United States has long maintained,is between the end product and the equipment used to manufacture it.In the case of semiconductors,the chip is the end product,while

36、lithography and other advanced machines are the equipment used in semiconductor fabrication.The United States has never controlled the end product as tightly as the means of making itadhering to the reverse of the old proverb“give someone a fish,you feed them for a day;teach them to fish,you feed th

37、em for a lifetime.”In other words,allowing strategic adversaries to access high-end manufacturing technologies allows them to advance several generations in technology development and ultimately surpass us.Frederick the Great said,“He who defends everything defends nothing.”Unfortunately,there is no

38、 Goldilocks solution,no level of controls that is“just right.”If there were,the United States would already have developed and implemented it.Any solution carries risks and costs,and the best a government can do is sort these out and judge how to structure a policy that protects its domestic technol

39、ogy industries from avoidable revenue losses while also restricting the export of technologies that would enable a more rapid advancement of rival states technological capabilities.The most obvious implication of a poorly designed export control policy is that China enhances its strategic and milita

40、ry capabilities by acquiring technologies that help offset the advantage that the United States currently retains.The Chinese government has been proactive in making structural changes to encourage critical technology research and development(R&D).Its leadership is overhauling the science and techno

41、logy ministrys organization by merging its education and research arm with practical applications.6 The changes also establish a“national technology transfer system”and expand the ministrys role in formulating country-wide initiatives and leading policymaking efforts to give it more capacity to redu

42、ce Chinese reliance on U.S.advanced technology.The Chinese government is supporting its ambitions with the necessary capital.China accounts for half of the nearly$30 billion in global public funding destined for quantum computing.7 It has allocated$145 billion to the semiconductor industry through s

43、tate capitals such as its Integrated Circuit Investment Fund,in addition to designating the sector as Chinas top industrial initiative priority.8China is also poised to double its investment in AI to almost$27 billion by 2026,at which point it would account for 9 percent of global AI investments.9 A

44、lready last year,the Peoples Liberation Armys(PLA)investment in AI was on par with the Pentagons.10 Lastly,the Chinese Communist Partys latest five-year plan shows that the country seeks to overtake U.S.biotechnology market share within the next decade,as the 4|Optimizing Export Controls for Critica

45、l and Emerging Technologiescountrys biotech firms jumped from investing$11.2 billion in 2020 to$16.6 billion in 2021.11 In short,China is changing its state infrastructure to ensure that the country continues to innovate in critical technology sectors while becoming less dependent on imports from ot

46、her key players in advanced technology supply chains.Using a trade lens to evaluate geostrategic competition and how best to maintain U.S.military superiority,this report assesses what the optimal export control policy should be,knowing that there are serious political constraints domestically as we

47、ll as with key allies.The first in a series of three,this report seeks to reimagine the current approach to export controls in particularly sensitive areas of emerging technologies that pose the greatest challenges.It begins by comparing current control lists to see where they overlap,which in turn

48、provides greater clarity on the current U.S.definition of national security critical sectors.After comparing control lists,the report evaluates quantum computing,AI,semiconductors,biotechnology,and intangible goods to determine whether additional controls are necessaryand,if so,what economic costs s

49、uch controls would entail.The second report will examine other parts of the Commerce Control List(CCL)beyond the technologies featured in this report,along with other elements of U.S.export control policy such as the Entity List,country listings,and catch-all controls.It will also evaluate foreign a

50、vailability of inputs into these national security critical supply chains and assess the advantages and challenges of building an improved multilateral framework to constrain Chinese civil-military fusion.The third report will address multilateral export control structurespresenting the existing one

51、s and discussing whether new ones are necessaryas well as the question of how to integrate foreign availability considerations into U.S.control policy.Overall,this project examines how to construct a new policy that is better able to meet the demands of the current geostrategic and technological env

52、ironment,evaluating what is politically and economically feasible when rethinking the U.S.approach to export controls.5|William A.Reinsch,Emily Benson,Thibault Denamiel,and Margot PutnamNational SecurityDefinitions of what is critical to U.S.national security are moving away from strict nonprolifera

53、tion goals and toward much more expansive definitions that blur the lines between national security and economic security.Reimagining the U.S.approach to export controls depends first on determining which technologies are critical to U.S.national security,which hinges on how that term is defined.The

54、 United States export control policy evolved out of the 1949 Export Control Act,which sought primarily to protect the U.S.domestic economy,advance U.S.foreign policy objectives,and control exports that affect U.S.national security.The Code of Federal Regulations defines national security as“those ac

55、tivities which are directly concerned with the foreign relations of the United States,or protection of the Nation from internal subversion,foreign aggression,or terrorism.”12 This definition displays a vagueness appropriate to the breadth of changes that U.S.strategy has experienced in the post-WWII

56、 era.In the second half of the twentieth century,U.S.national security was characterized primarily by a nonproliferation agendathat is,preventing adversaries from gaining the technology necessary for nuclear weapons capabilities.This approach focused primarily on the Soviet Union.In multilateral ins

57、titutions,such as the Coordinating Committee for Multilateral Export Controls(COCOM),national security policies were designed around these objectives,resulting in a fairly narrow approach to what the U.S.government and its allies considered critical to security.The United States began to recalibrate

58、 its understanding of national security after the collapse of the Soviet Union.The issues of terrorism and non-state actors,which peaked in the wake of the 9/11 attacks,dramatized the new threats,although it had a minimal impact on control lists aside from moderate expansions into the use of control

59、s for foreign policy and human rights objectives.Other considerations,such as economic and diplomatic tools,were integrated into the security picture.While the initial reforms were modest,there has been a more recent push to approach national security from a wider 6|Optimizing Export Controls for Cr

60、itical and Emerging Technologiesperspective.This realization has led to the Biden administrations National Security Strategy,which connects domestic economic prosperity and national security interests by making the case that new investments“will enable the United States to anchor an allied techno-in

61、dustrial base that will safeguard our shared security,prosperity and values.”Per the National Security Strategy,“this means working with allies and partners to harness and scale new technologies,and promote the foundational technologies of the 21st century,especially microelectronics,advanced comput

62、ing and quantum technologies,artificial intelligence,biotechnology and biomanufacturing,advanced telecommunications,and clean energy technologies.”The National Security Strategy also makes clear that“the Administration is ready to emphasize a modern industrial and innovation strategy to achieve its

63、foreign policy objectives.”13 The infusion of techno-industrial concerns into the administrations most foundational national security document underscores a significant broadening of what it considers critical to national security.This shift in thinking is also captured in several speeches by top ad

64、ministration officials.In September 2022,National Security Advisor Jake Sullivan delivered remarks that cited“three families of technologies”that“will be of particular importance over the coming decade.”The three technology categories are:1)Computing-related technologies such as quantum information

65、systems,AI,and microelectronics;2)Biotechnologies and biomanufacturing;3)Clean energy technology Sullivan then noted that the“first pillar”of the Biden administrations technology strategy is“recharging the engine of American technological dynamism and innovation,especially in these foundational sect

66、ors.”He described U.S.leadership in each sector as a“national security imperative.”14Under Secretary for Industry and Security Alan Estevez has clarified that BIS looks“to see whats available in the world and whether it makes sense to apply controls.If I stop a US firm from shipping something that i

67、s ubiquitous in the world,Im really not doing anything.can feel good about ourselves sic,but were not stopping the national security threat.”15 To that end,BIS may relax rules when it determines that controlling a certain technologys export is no longer critical to national security and would benefi

68、t U.S.producers.For instance,the agency recently eased its licensing policy on certain satellite exports:components going to members of the Missile Technology Control Regime.16 Countries participating in the regime will be reviewed on a case-by-case basis instead of a presumption of denial,helping s

69、atellite manufacturers gain access to foreign markets.The infusion of techno-industrial concerns into the administrations most foundational national security document underscores a significant broadening of what it considers critical to national security.While there is some convergence across export

70、 control and other technology control lists,they differ significantly because each list serves a distinct purpose.A factor that complicates defining national securityand which therefore complicates the design and implementation of export controlsis that existing lists do not always agree on what is

71、important.These divergences give U.S.agencies greater authority to promulgate controls over goods that they consider relevant.The multiplicity of lists thus provides greater agility to the U.S.government,but it can also complicate the ability of the private sector to discern what the government rega

72、rds as critical to national security.The chart 7|William A.Reinsch,Emily Benson,Thibault Denamiel,and Margot Putnambelow provides a snapshot of the difficulties of using a list-based system to delineate what the U.S.government regards as national security critical.Control ListsControl Category Comme

73、rce Control List(Commerce Department)Wassenaar Arrangement(Commerce Department and State Department)Committee on Foreign Investment in the United States Executive Order(White House and Treasury Department)Outbound Investment Executive Order(likely forthcoming)(White House and Treasury Department)Com

74、merce Review of Controls for Certain Emerging Technologies17(Commerce Department)Critical and Emerging echnologies(Office of Science and Technology Policy)Nuclear Materials,Facilities and Equipment(and miscellaneous items)XXXXMaterials,Chemicals,Microorganisms,and Toxins XXXXXMaterials Processing XX

75、XXElectronics XXXXComputers XXXXTelecommunicationsXXXXInformation Security XXXXSensors and Lasers X?XXNavigation and Avionics XXXMarine XXXXAerospace and Propulsion XXXXSpecial Materials and Related Equipment XX?XAdvanced Computing XX?Advanced Engineering Materials XXXXAdvanced Gas Turbine Engine Te

76、chnologies XXXXXAdvanced Manufacturing XXX?Advanced and Networked Sensing and Signature Management XX?Advanced Nuclear Energy Technologies XXpossibleXArtificial Intelligence XXXlikely8|Optimizing Export Controls for Critical and Emerging TechnologiesAutonomous Systems and Robotics XXXpossibleBiotech

77、nologies XpossibleCommunication and Networking Technologies XXXXDirected Energy XXXXXFinancial Technologies XXXXXHuman-Machine Interfaces XXXpossibleHypersonics XXXXRenewable Energy Generation and Storage XXXXXMicroelectronics XlikelyXQuantum Computing XlikelyXAdvanced Clean Energy XXXXXClimate Adap

78、tation Technology XXXXXCritical Minerals XXXXXElements of the Agriculture Industrial Base XXXXXData Analytics Technology XX?XLogistics Technology XXXXNote:This chart is a simplified description of the lists.It does not include subcategories,for example,and it is intended as a helpful guide rather th

79、an a comprehensive blueprint.Source:CSIS combination and retooling of existing lists from multiple government sources,such as the Department of Commerce,Department of Treasury,Department of State,and the White House.The lists are tailored to their respective individual agencys purposes,but their ove

80、rlap provides insight into the greater control capabilities of the U.S.government.The BIS list closely resembles the Wassenaar Arrangements dual-use list,while the Committee on Foreign Investment in the United States(CFIUS)executive order list and the White House Critical and Emerging Technologies L

81、ist highlight key priority areas of the administration.A single list could lead to more administrative consistency and more certainty for exporters,but a single list would depend on a single definition of national securityand it is not clear that the United States had one in the past,much less now.B

82、ecause lists are designed by different agencies and for different purposes,it makes sense that they do not completely overlap.However,as the above chart highlights,it is nearly impossible to develop a clean and definitive definition of national security based solely on a comparison of lists.Neverthe

83、less,assessing where they do overlap can shed light on definitions of national security and provide guidelines,although not a blueprint,for thinking about retooling existing lists.Each of the lists is presented in more detail below.Wassenaar ArrangementThe Wassenaar Arrangement is the worlds largest

84、 multilateral export control regime,consisting of a diverse set of 42 countries.18 The Wassenaar dual-use list includes the following categories:1)Special Materials and Related 9|William A.Reinsch,Emily Benson,Thibault Denamiel,and Margot PutnamEquipment;2)Materials Processing;3)Electronics;4)Comput

85、ers;5.1)Telecommunications;5.2)Information Security;6)Sensors and Lasers;7)Navigation and Avionics;8)Marine;and 9)Aerospace and Propulsion.In 2019,the Wassenaar Arrangement produced a series of significant updates on new controls.19 These included controls on emerging technologies such as cyberwarfa

86、re software,suborbital aerospace vehicles,lithography equipment and technology,hybrid machine tools,and a host of other technologies such as digital investigative tools and forensic systems that can detect digital crime.During that process,member states also significantly relaxed some controls,for e

87、xample on commercial components with embedded cryptography.Although many countries,such as the Netherlands,maintain lists that are legally tied to the Wassenaar control list,implementing them remains the prerogative of participating states,which they do through domestic statutes.G7 countries have tr

88、aditionally opted to align their lists with the Wassenaar Arrangement list,in addition to other export control mechanisms,and the United States is no exception.The official organization of the CCL shows the close alignment of the BIS classifications with the Wassenaar Arrangement dual-use list.Comme

89、rce Control List The existence of control lists helps define what the United States and its international partners deem national security critical.The CCL consists of roughly 3,100 items that adhere to the Export Administration Regulations(EAR),which govern the export of physical commodities,softwar

90、e,and technology.20 There are 10 main categories of the CCL:0)Nuclear materials,Facilities,and Equipment(and Miscellaneous Items);1)Materials,Chemicals,Microorganisms,and Toxins;2)Materials Processing;3)Electronics;4)Computers;5)Part 1 Telecommunications and Part 2 Information Security;6)Sensors and

91、 Lasers;7)Navigation and Avionics;8)Marine;and 9)Aerospace and Propulsion.If an item falls under the Department of Commerces jurisdiction and is not listed on the CCL,it is designated as EAR99.EAR99 items generally consist of low-technology consumer goods and do not require a license in most situati

92、ons.However,if a business plans to export an EAR999 item to an embargoed country,to an end user of concern,or in support of a prohibited end use,that business may be required to obtain a license.The CCL includes items from the following lists:1.Items on the Wassenaar Arrangement dual-use list;21 2.N

93、uclear-related dual use commodities(compiled in the Nuclear Suppliers Groups Nuclear Referral List);22 3.Dual-use items on the Missile Technology Control Regime List;23 4.Chemical Weapon(CW)Precursors,biological organisms and toxins,and Chemical and Biological Weapon(CBW)related equipment on the Aus

94、tralia Group lists;24 5.Items controlled in furtherance of U.S.foreign policy and other objectives,including anti-terrorism,crime control,Firearms Convention,regional stability,UN sanctions,and short supply reasons;and 6.Unlisted items when destined for specified end uses or end users(catch-all cont

95、rols).In short,the CCL includes items on the Wassenaar dual-use list but goes beyond it.The United States authority to promulgate unilateral controls arises from the ECRA,which differs significantly from the authorities of key allies.ECRA also mandates that BIS determines a list of“emerging”and“foun

96、dational”technologies for control,referred to as Section 1758 Controls.The label of“emerging”technology was intended to target more nascent sectors,such as AI and quantum computing,while“foundational”technologies included hardware such as microelectronics.To date,however,BIS has not produced a 10|Op

97、timizing Export Controls for Critical and Emerging Technologiesdefinitive list,although it has regularly added items under the“emerging”category that have then been adopted by the Wassenaar Arrangement.25In November 2018,the Department of Commerce published an advanced notice of proposed rulemaking,

98、entitled“Review of Control for Certain Emerging Technologies.”26 There are 14 categories in this list,all of which include several subcategories.27 While the technological categories are relatively broad,the list is considered to have set the precedent for several of the controls that followed short

99、ly thereafter.Last year,BIS published the“Implementation of Certain 2021 Wassenaar Arrangement Decisions on Four Section 1758 Technologies.”This updated the CCL for the following four items:“two substrates of ultra-wide bandgap semiconductors(Gallium Oxide(Ga2 O3)and diamond),Electronic Computer Aid

100、ed Design(ECAD)software specially designed for the development of integrated circuits with any Gate-All-Around Field-Effect Transistors(GAAFET)structure,and pressure gain combustion(PGC)technology for the production and development of gas turbine engine components or systems.”28Critical and Emerging

101、 TechnologiesA list that does not directly deal with export controls but which sheds light on U.S.definitions of national security is the Critical and Emerging Technologies(CET)list.29 This list,published in February 2022,contains a different set of technologies than those outlined in other similar

102、government documents.The list includes 18 primary categories and their subsets.The CET update was drafted by the Fast Track Action Subcommittee on Critical and Emerging Technologies of the National Science and Technology Council,which was established in 2020,when the White House published the initia

103、l report on CETs.30 It is unclear whether the subcommittee will update the list again in two years.Furthermore,this list does not have a regulatory function.31 According to a report by the Fast Track Action Subcommittee,CETs are a“subset of advanced technologies that are potentially significant to U

104、.S.national security.”32CFIUS GuidanceOn September 15,2022,President Biden signed an executive order,“Ensuring Robust Consideration of Evolving National Security Risks by the Committee on Foreign Investment in the United States,”which directs the Treasury Departments Committee on Foreign Investment

105、in the United States33(CFIUS)to consider evolving risks and security factors.This executive order included a list of new sectors and technologies to consider,not only for investments within the defense industry but also outside of defense.According to the official presidential document:The Committee

106、 shall consider,as appropriate,the covered transactions effect on supply chain resilience and security,both within and outside of the defense industrial base,in manufacturing capabilities,services,critical mineral resources,or technologies that are fundamental to national security,including:microele

107、ctronics,artificial intelligence,biotechnology and biomanufacturing,quantum computing,advanced clean energy(such as battery storage and hydrogen),climate adaptation technologies,critical materials(such as lithium and rare earth elements),elements of the agriculture industrial base that have implicat

108、ions for food security,and any other sectors identified in section 3(b)or section 4(a)of Executive Order 1401734 of February 24,2021(Americas Supply Chains).35This list underscores several areas that the administration deems critical to national security,ranging from quantum computing and biotechnol

109、ogy to AI.11|William A.Reinsch,Emily Benson,Thibault Denamiel,and Margot PutnamOutbound Investment Reviews In addition to export controls,the administration is currently drafting an executive order that would establish a new mechanism to screen and potentially ban certain outbound financial transact

110、ions.36 This is based on the belief that the United States controls inbound capital flows via CFIUS and outbound items via export controls,leaving a gap in national security by failing to cover outbound investments.The private sector and several U.S.government agencies have expressed concern about t

111、he implementation of a tool that could potentially chill financial exchanges in emerging sectors,such as quantum computing,and have recommended significantly paring back proposals so that this new control would target primarily knowledge transfers or establishes a high threshold for review to only a

112、 select set of entities.The executive order has been significantly scaled back over time but will likely cover quantum technology,AI,and microelectronics.It has historically been the job of the government to identify national security priorities.The private sector does not have the authority to make

113、 those judgments and,in any event,lacks the information to do so.It is thus incumbent upon the government to determine what constitutes a national security threat and to weigh the severity of the threat against the economic costs of pursuing controls.Based on the above lists,as well as on public sta

114、tements from administration officials,it can be reasonably assumed that priority areas of the administration include the following four sectors:quantum technology,AI,semiconductors,and biotechnology.The below section evaluates the benefits and drawbacks of applying additional export controls to thes

115、e sectorsalong with a new category of intangible items,which this report recommends be added.12|Optimizing Export Controls for Critical and Emerging TechnologiesCritical TechnologiesAs economic security is increasingly conflated with national security,the U.S.government must clearly define its strat

116、egic objectives to avoid the appearance that its policies are protectionism in disguise.At the same time,controlling emerging and foundational technologies can deprive firms of export-based revenue,potentially imperiling long-term security goals.It is therefore vital that additional controls in sect

117、ors such as AI and quantum technologies are surgical and narrowly targeted.Determining criticality depends on the division of technology into more specific thematic areas.This includes a taxonomy that separates technologies into distinct categories based on their specific applications.For instance,i

118、t is important to differentiate technologies with 1)warfighting capabilities with direct applications in ground,sea,air,and electronic warfare;2)ICT applications that allow allied parties to communicate with each other,the importance of which was demonstrated during the Balkan conflict in the 1990s

119、and which continues to be important in todays threat environment;and 3)intelligence capabilities that allow for the collection of data to wage war,such as the location targeting data used in High Mobility Artillery Rocker System(HIMARS)strikes in Ukraine.The hardware-software distinction is importan

120、t,but intangible items such as software can also be critical to U.S.national security interests.The latter is significantly more difficult to control because it is not available for physical inspection at docks and airports and can be exported digitally.This problem arises across myriad technologies

121、,ranging from quantum computing to biotechnology and AI.While controlling hardware is in some ways simpler,it is also incomplete since many emerging dual-use technologies require data as an input.As demonstrated below,reimagining the export control regime requires a significant retooling of how the

122、United States governs data exportsbut also a targeted reassessment of how the government handles physical inputs and knowledge transfers,or“deemed exports.”As developing national capabilities in critical technologies depends on a highly intertwined and often international ecosystem of research colla

123、boration,13|William A.Reinsch,Emily Benson,Thibault Denamiel,and Margot PutnamU.S.leaders in critical technology rely on research made possible through knowledge transfers from U.S.persons to foreign nationals,or“deemed exports,”and vice versa.Deemed ExportsRegulated information or technology releas

124、ed to a foreign national in the United States is deemed to be an export to the home country of that national or entity.This does not apply to permanent residents or protected individuals.According to the Export Administration Regulations(EAR),an export of technology or source code is“deemed”to have

125、occurred when:it is available to foreign nationals for visual inspection technology is exchanged orally;and technology is made available by practice or application under the guidance of persons with knowledge of the technology.Controlled commodities,such as critical technologies,therefore have a lic

126、ense requirement to authorize their use by foreign individuals,even if this use takes place within the United States.For instance,commodities may be considered exported during training involving controlled equipment or when controlled data is disseminated by email or in conversations.Source:“Deemed

127、Exports and Fundamental Research for Biological Items,”Bureau of Industry and Security,Department Commerce,https:/www.bis.doc.gov/index.php/regulations/export-administration-regulations-ear/14-policy-guidance/deemed-exports#:text=What%20is%20a%20Deemed%20Export,permanent%20residents%20or%20protected

128、%20individuals.;and“Deemed Exports,”Research and Department,University of Maryland,Baltimore,https:/www.umaryland.edu/ord/export-compliance/procedures/deemed-exports/.Control of deemed exports is an issue that applies to each of the technologies under discussion in this report;indeed,they are an imp

129、ortant element of the United Statess recent October 7,2022,rules on semiconductor controls,which will be discussed in detail in a later section.While the requirement to license a deemed export has been in existence for years,the increased complexity and sophistication of technologies has contributed

130、 to more international collaboration on their development,which has made the deemed export issue more important.The biggest problem with the concept,however,has not been with respect to licensing but with respect to enforcement:it is inherently difficult for enforcement authorities to discover when

131、technical discussions with foreign parties go beyond the limitations of a deemed export license.Quantum Technology Quantum-enabling technologies have come to the forefront of national security considerations.In February 2022,the White Houses Critical and Emerging Technologies List Update divided qua

132、ntum into the following five categories:1)quantum computing;2)quantum computing materials,isotopes,and fabrication techniques for quantum devices;3)post-quantum cryptography;4)quantum sensing;and 5)quantum networking.37 In May 2022,the Biden administration released its“National Security Memorandum o

133、n Promoting United States Leadership in Quantum Computing While Mitigating Risks to Vulnerable Cryptographic Systems.”38 This 14|Optimizing Export Controls for Critical and Emerging Technologiesdocument outlines the Biden administrations quantum computing strategy.Per the document,promoting U.S.lead

134、ership in quantum technology and mitigating certain associated risks will also rely on government protections of quantum:“Protection mechanisms will vary,but may include counterintelligence measures,well-targeted export controls,and campaigns to educate industry and academia on the threat of cybercr

135、ime and IP theft.”39 In November 2022,Undersecretary for Industry and Security Alan Estevez alluded to potential restrictions on quantum technology exports,saying about controls on quantum computer equipment:“So will we end up doing something in those areas?.If I was a betting person,I would put dow

136、n money on that.”40A Congressional Research Service study on quantum computing highlights the Defense Science Boards conclusion that there are three applications of quantum technology with significant implications for national defense tools:quantum sensing,quantum computers,and quantum communication

137、s.According to the Congressional Research Service,quantum sensing is currently“poised for mission use”as it provides a number of enhanced capabilities such as alternative positioning,navigation,and timing options that could allow militaries to continue to operate at full performance in GPS-degraded

138、or GPS-denied environments.41 It also plays an intelligence,surveillance,and reconnaissance(ISR)role.Quantum computing,the second set of quantum technologies highlighted by the CRS,is still emerging.However,at capacity,it could facilitate breakthroughs in machine learning,which would improve recogni

139、tion and machine-based target identification capabilities.42 In addition,quantum computers have the potential to break the encryption of classified or controlled unclassified information.However,only drastic advances would allow quantum computers to break current encryption methods.43 A quantum comp

140、uter would need to process 20 million qubits to break current encryption methods,and the most advanced quantum computers today usually have less than 433 qubits.44 These practical applications can only be achieved after improvements in error rates and development of new algorithms,software tools,and

141、 hardware.The third set of technologies,quantum communications,also remains nascent but could lead to the secure networking of quantum military systems.For instance,quantum key distribution deploys communications that,in theory,cannot be intercepted.The quantum industry overall remains relatively sm

142、all.Recent estimates show that the current quantum technology market reached$761 million in 2022,although it is expected to reach$1.09 billion in 2025,at a compounded growth rate of 13 percent annually.The same analysis shows that the quantum cryptography market remains quite small,totaling$106 mill

143、ion in 2022.45 The small current value of the quantum market means that controls on the industry are particularly risky since they could stifle an industry on the cusp of growing.In addition,estimates over the size of the market vary widely.For instance,the World Economic Forum claims that governmen

144、t and business investment in quantum computing alone is reaching$35.5 billion,contrasting Yole Groups more conservative estimate that the quantum market will reach$4 billion by 2035.46 The fact that estimates about the size of the industry present such large differences illustrates that quantum tech

145、nologies may be too nascent a field for accurate economic projections,let alone export controls.On the other hand,a sector is much easier to control when it is small,and controls are more effective when applied early to prevent leakage and minimize political pushback.Although there is not a consensu

146、s view on whether China or the United States currently leads in the quantum race,recent RAND Corporation analysis finds that the United States leads the world in most,but not all,quantum technologies.47 The United States has provided stable and globally competitive scientific research output in quan

147、tum information science(QIS).Aside from the U.S.governments significant funding of open QIS research,the private sector drives U.S.quantum technology deployment.As a result,the United States is the global leader in quantum computing and sensing,but not in quantum communications.Chinas quantum 15|Wil

148、liam A.Reinsch,Emily Benson,Thibault Denamiel,and Margot Putnamtechnology capabilities are rapidly developing,and it also presents high research output in every application domain.China has committed to spending$15 billion on quantum researchtwice as much as the United States and the European Union

149、combined.48 The government-funded laboratories quantum technology R&D has wielded quick technical progress,such as Baidus new quantum computer.49 Source:CSIS graphical representation of data from Edward Parker et al.,An Assessment of the U.S.and Chinese Industrial Bases in Quantum Technology(Santa M

150、onica,CA:RAND Corporation,2022),https:/www.rand.org/pubs/research_reports/RRA869-1.html;and“Quantum Computing and Communications:Status and Prospects,U.S.Government Accountability Office,October 20,2021,https:/www.gao.gov/products/gao-22-104422.Sources of Country-Specific Quantum Technology InputsFR

151、ANCEUNITED KINGDOMSynthetic diamondsOptical lithography toolsLaser diodesFiber phase modulatorsDouble-angle evaporatorsTHE NETHERLANDSGERMANYJAPANBlue gallium nitride laser diodesElectron beam lithography toolsNonlinear opticsCablesCHINARare and critical materialsNonlinear crystalsMirrors16|Optimizi

152、ng Export Controls for Critical and Emerging TechnologiesThe United States has begun to mitigate its investment gap with China by teaming up with key allies leading global QIS innovation on research and development efforts.Last February,the United States and the Netherlands announced a new joint end

153、eavor in quantum information sciences and technologies R&D,representing the fourth partnership of this kind undertaken by the Biden administration.The White House is concerned about the significant risks that quantum computing advances in countries of concern pose to U.S.economic and national securi

154、ty.Chief among these concerns is the cryptanalytically relevant quantum computer(CRQC),which could eventually break the public-key cryptography used on digital systems across the world.50 Breaking public-key cryptography could usher in a period of total transparency on the internet.For example,bank

155、account statements,health records,and state secrets would be available publicly online.Quantum researchers in China claimed to have designed an algorithm that could break public-key encryption years ahead of schedule,and while the findings were quickly debunked,attention surrounding the initial anno

156、uncement shows the underlying tension concerning the potential disruptions that quantum computing could have on our current cybersecurity apparatus.51A 2021 Government Accountability Office report about the United States capabilities vis-vis quantum computing and communications established how one o

157、f the largest obstacles to quantum technology development is a lack of suitable and reliable components and equipment,as they all depend on specific countries and producers.52 Examples include specialized lasers and high-quality optical fibers(which are produced in Denmark and Germany),cryogenic com

158、ponents(Finland),specialized synthetic diamonds(the United Kingdom),and rare and critical materials(China).53 As a result,the quantum supply chain includes potential single points of failure located in other countries.These have the potential to disrupt development if certain supporting technologies

159、 are unavailable.However,the existence of multiple chokepoints in different jurisdictions highlights the fundamentally globalized nature of the quantum technology supply chain.There is ongoing debate as to how to frame the performance of quantum computing for control purposes.The industry focuses on

160、 qubits,while others have suggested that other thresholds have value,such as error correction software.James Sanders,the principal analyst for quantum computing at CCS Insight,suggested that physical components of quantum computerssuch as helium dilution refrigerators,cryogenic ion trap packages,and

161、 magneto-optical trapswould be a better basis for controls.54 Another key control obstacle is that most of the current software behind quantum is open source.However,some aspects of quantum computing software are proprietary and therefore easier to control.Despite these challenges,the U.S.government

162、 has initiated formal steps to regulate quantum technology exports.In the spring of 2021,BIS added Export Control Classification Number(ECCN)4A006 to“control quantum computers and related electronic assemblies and components including specified qubit devices and circuits and quantum control componen

163、ts and measurement devices.”It further explained that“quantum computing is expected to have a significant impact in many commercial and military areas,and early implementation of this proposal is warranted.”55 In response,companies and researchers have urged caution regarding the costs of controllin

164、g the early-stage quantum sector.56 In comments to the Trump administration regarding definitions of emerging and foundational technologies,IBM outlined the following recommendation:We believe any new controls should be narrowly focused,because broad application of new controls could significantly h

165、arm U.S.industries and put American businesses at a competitive disadvantage while failing to actually restrict access by parties of concern.For example,Artificial Intelligence(AI)generally is a poor candidate for control as an“emerging technology,”but specific applications of AI using certain data

166、sets could prove to be an effective chokepoint.17|William A.Reinsch,Emily Benson,Thibault Denamiel,and Margot PutnamIBM,one of the leading quantum firms in the United States,also expressed similar reservations about the application of export controls to the nascent field of quantum computing.IBM arg

167、ues that“Quantum Computing(QC)is still a nascent technology with its roots in fundamental research.QC continues to require a large ecosystem to derive not only the correct technology to apply but also the relevant commercial opportunities to explore.Any new controls in this space should adopt a do n

168、o harm principle that promotes innovation.”57 IBM also recommended in consultation rounds with U.S.officials that“regulations cover potentially problematic uses of quantum computing rather than limiting the technology based simply on processing power.”58When it comes to export controls,Washington sh

169、ould be wary of falling into a“metrics”trap when attempting to identify specific thresholds for controls.The number of qubits that a quantum computer can process,for instance,does not provide an adequate baseline.First,networked supercomputers could circumvent the threshold by combining the processi

170、ng power of multiple computers by enabling parallel and synchronized computing cycles,each below a given designated qubit control threshold.Second,quantum computers with enough processing power to break encryption(about 20 million qubits to break a 2048-bit RSA in eight hours59)are still far from be

171、ing developed anywhere.60 Officials from the National Institute of Standards and Technology are currently working to develop quantum-resistant algorithms that could withstand hacking attempts from such computers by 2024 or 2025,aiming to roll them out throughout the following decade.61 Looking at sp

172、ecific physical components necessary to power quantum computers,such as helium dilution refrigerators,provides more concrete control solutions.However,manufacturing many of these components is already within the grasp of Chinese industry.Identifying what countries of concernespecially Chinacan alrea

173、dy accomplish without the United States and allies is essential.Again,in the quantum computing realm,China has already delivered a commercial 24-qubit quantum computer based on superconducting technology.62 When it comes to components,China also manufactures its own digital-to-analog converters,opti

174、cs and raw materials,and nonlinear crystals,to name a few.63 Another challenge for quantum controls is the multiple ways quantum computers can be built,as the different methods require their own inputs.A quantum computer based on nuclear magnetic resonance will use a spectrometer to measure and wiel

175、d the magnetic field in the atomic nuclei in molecules)that will require cooling a magnet using liquid nitrogen and helium.64 On the other hand,ion-trapped quantum computers are based on steel vacuum chambers containing an integrated circuit with electrodes chilled to a very low temperature.For this

176、 modality,the qubits are the ions trapped in the steel chamber by electric fields and manipulated by high-quality lasers.65 A quantum computer can be also based on a superconducting chip,in which two lithium superconductors create a qubit functioning as an atom with two quantum energy levels.66 As m

177、icrowave pulses are sent to a resonator coupled to the qubit,the duration of these pulses creates a state of superposition.To eliminate any resistance,that system requires materials to be cooled below a certain temperature,requiring hardware like helium dilution refrigerators.67 Developers are curre

178、ntly pursuing at least 12 different kinds of quantum modalities.68 The impact of blocking Chinas access to one specific type of hardware(i.e.,of targeting one of the modalities)would be ineffective in curbing Chinas capabilities in the long run,as they could just utilize another method of building a

179、 quantum computer.Additionally,the application of controls on one modality could artificially push investment towards another modality that may not otherwise have prevailed,thus hurting U.S.technological advancement.Such artificial creation of winners and losers should be avoided.In other words,for

180、controls to be effective in this sector,they would have to be extraterritorial and extensive,potentially hobbling an industry where foreign availability is already accelerating and in which the United States does not maintain a significant leadif any.18|Optimizing Export Controls for Critical and Em

181、erging TechnologiesThe absence of horizontal integration also makes current quantum technology production much more expensive than it will be later on.As quantum technology companies rely on a small number of suppliers for a wide array of inputs,costs are substantially higher for the quantum industr

182、y now than they likely will be within the next decade,making the application of additional controls even more burdensome for the private sector.To the extent that there exists a consensus within the quantum technology sector,it is that the application of controls would primarily restrain innovation,

183、and now is not the appropriate time for new controls.Instead,the U.S.government should focus on ramping up domestic quantum technology capacity.The race for talent is one of the first areas of focus for policymakers.An important step towards boosting a nascent industry is to cultivate its talent poo

184、l,primarily by loosening immigration restrictions in the sector.For example,following the Russian invasion of Ukraine,Russian quantum scientists sought refuge in Western European countries but were turned away at the border due to fear of violating sanctions and export controls.This likely unintende

185、d consequence of export controls and sanctions directly contravenes long-term strategic objectives and highlights the need to build in flexibility where possible,along with increasing educational support for high-tech sectors.To the extent that there exists a consensus within the quantum technology

186、sector,it is that the application of controls would primarily restrain innovation,and now is not the appropriate time for new controls.SemiconductorsSemiconductors are one of the most critical national security technologies as well as a key part of the civilian economythe ultimate dual-use good.Semi

187、conductors function as“the brains of modern electronics”and serve as high-tech inputs in a wide range of sectors,such as healthcare,clean technology,and advanced computing.69 They are used in most advanced weapons procured by the Pentagon and are vital components of a range of technologies,including

188、 hypersonic weapons,AI,and advanced telecom applications.U.S.exports of semiconductors constitute the largest share of all U.S.electronic product exports.70 Semiconductor global value chains(GVCs)are highly complex and thus replete with potential chokepoints.Their nature highlights the need for the

189、United States to promulgate export controls in partnership with key allies,since unilateral controls risk“damming half the river”if foreign producers can step in to supply market demand.Broadly speaking,there are six different regions where semiconductor supply chains are concentrated:the United Sta

190、tes,China,Taiwan,South Korea,Japan,and Europe.71 Key supply chain chokepoints include electronic design automation(EDA)and core IP;manufacturing equipment;wafer fabrication;and assembly,testing,and packaging.The United States largely leads in R&D-intensive activities,such as EDA and IP,manufacturing

191、 equipment,and chip design.72 Japan and Europe are also key players in these areas.Assembly,testing,and packaging(ATP)capabilities are far more concentrated in China and Taiwan.7319|William A.Reinsch,Emily Benson,Thibault Denamiel,and Margot PutnamConcentration in wafer fabrication capacity,or the p

192、rocess of turning chips into completed circuits,also varies by region and depends on the type of chip.While South Korea is the primary wafer fabricator for memory chips(accounting for 33 percent of the global market74),fabrication of the most advanced chips,sub-10 nanometer chips,is heavily concentr

193、ated in Taiwan,which boasts 92 percent of the fabrication capacity.75 Concentration is more dispersed with other advanced nodes,such as 10-to 22-nanometer chip fabrication,with the United States maintaining 43 percent of the market versus Taiwans 28 percent.76 Taiwan additionally maintains a 47 perc

194、ent and 31 percent market share,respectively,of fabrication capacity for more mature 28-to 45-nanometer chips and greater than 45-nanometer chips,respectively.The United States and Taiwan thus represent the worlds strongest chokepoints over advanced chips.As the demand for increasingly advanced tech

195、nology grows,the geopolitical might of the United States and Taiwan will commensurately grow if the two can maintain their dominance in advanced chip design and production.Simplified Depiction of the Semiconductor Value ChainDesign(e.g.,microprocessor design)Fabrication(e.g.,processed wafers)Assembl

196、y&Test(e.g.,packaged microprocessor units)Design Sofware(e.g.,electronic design automation)Intellectual Property(e.g.,licensed ARM architecture)Materials&Chemicals(e.g.,raw silicon wafers,neon)Manufacturing Equipment(e.g.,lithography tools)123FIGURE 1Simplified Depiction of the Semiconductor Value C

197、hainSource:Authors own creation.Source:Gregory Allen and Emily Benson,“Clues to the U.S.-Dutch-Japanese Semiconductor Export Control Deal Are Hiding In Plain Sight,”CSIS,CSIS White Paper,March 1,2023,https:/www.csis.org/analysis/clues-us-dutch-japanese-semiconductor-export-controls-deal-are-hiding-p

198、lain-sight.The globalization of semiconductor manufacturing has been the key component of Chinas civil-military fusion doctrine.77 For instance,chips that are specifically designed for AI applications can be exponentially more efficient than general-purpose chips,such as central processing units(CPU

199、S),and are more cost-effective.The Chinese military AI systems use U.S.chips,meaning that export controls on advanced semiconductors could degrade current Chinese AI capabilities.More than 95 percent of chips used in China are designed by U.S.firms.National Security Advisor Jake Sullivan announced t

200、he United States would be shifting its export control approach toward China.Instead of trying to maintain an advantage,the United States would now try to“maintain as large of a lead as possible”and that instead of using them as preventative measures,U.S.export controls would be“implemented in a way

201、that is robust,durable,and comprehensive.”78 Rather than a moving target that allowed China to obtain older generation technology as U.S.technology advanced,thus keeping them behind while the United States maintained its leadership,the new controls aim to establish a static ceiling above which Chine

202、se semiconductor capabilities would not be able to develop.On October 7,2022,the United States implemented a series of new unilateral controls on advanced AI chips to China,in what CSIS has described as a“two-pronged approach”to controlling Chinas access to semiconductors.79 These controls included

203、new licensing requirements for deemed exports and also levied new controls on hardware and EDA software exported to China.80 In addition,the controls add license requirements for chips destined for use in supercomputers,the manufacture of semiconductors,and manufacturing equipment.They also add requ

204、irements for items destined for fabs in China that manufacture logic chips with non-planar transistor architectures or with a“production technology node of 20|Optimizing Export Controls for Critical and Emerging Technologies16/14 nanometers(nm)or below;DRAM memory chips of 18nm half-pitch or less;or

205、 NAND flash memory chipswith 128 layers or more.”81Most semiconductor controls can be found under ECCN 3A001 of the CCL in the EAR.The October 7 export controls imposed greater restrictions on chip exports to China.ECCNs 3A090 and 4A090 have had the biggest impact on U.S.companies,namely Lam Researc

206、h and KLA.ECCN 3A090 includes various processing units,logic devices,and application-specific ICs,while ECCN 4A090 comprises computers,electronic assemblies,and components containing ICs that exceed the limits outlined by 3A090.82 The rules themselves are both hardware-and parameter-driven,and softw

207、are companies have not been as significantly hit by the regulations.Because there are not many companies in China producing supercomputing technologies,several companies have asked BIS for a list of companies with whom they are still able to contract,which BIS should supply.News broke during the sum

208、mer of 2022 that Chinas SMIC had produced 7-nanometer chips,which,if confirmed,would mean that China had leapfrogged significantly into new advanced chip territory.There is doubt that SMIC would be able to produce these high-grade chips at scale,and it is likely that the IP used to manufacture the c

209、hips was stolen from TSMC.Following this revelation,Chinese leadership grew concerned that the Biden administration would use this news to implement new controls,leading China to acquire an unusually large amount of inputs and machine tools used in the manufacturing of advanced semiconductors.This s

210、tockpiling led to concerns about the long-term integration of advanced chip programs with military programs in China,in line with their civil-military fusion doctrine that blurs lines between civil and military pursuits.To block the proliferation of this advanced technology,the United States impleme

211、nted what were initially unilateral controls on chips and manufacturing tools,although in January 2023 the Biden administration succeeded in bringing the Japanese and Dutch on boardsince these countries produce key inputs,such as machine tools and advanced imaging technology.Because the United State

212、s only controls one chokepoint of the advanced semiconductor supply chain on EDA software,it needed to encourage other advanced economies to join.In March and April 2023,the Netherlands and Japan announced additional controls on their semiconductor exports to China,effectively joining the U.S.chip c

213、ontrols.83 However,wary of economic retaliation from China and also reluctant to get involved in what is increasingly seen as a contentious power struggle between China and the United States,neither the Netherlands nor Japan explicitly referenced a“deal”with the United States when announcing new con

214、trols.The two primary chokepoints targeted in this additional trilateral tranche of controls roughly distill into controls on manufacturing inputs and equipment and controls on EDA software.China currently maintains critically low market capabilities when it comes to advanced manufacturing equipment

215、.84 As mentioned previously,prior to the October 7 rules,U.S.policy embraced a“moving target”approach that aimed at keeping adversaries one or two generations behind technologically.The United States would raise the level of controls as new technology emerged and then release older generations for e

216、xport.As a result,China was denied access to the most advanced technology;U.S.companies were able to sell older technology to China and use the revenue generated for research and development;and permitting those exports reduced the incentive for the development of Chinese alternatives.The new policy

217、 seeks not simply to keep China behind but to degrade its military capabilities by keeping U.S.controls at the current level regardless of future technology developments.That means the set of controlled items and technologies will become much larger over time,with a concomitant increase in the diffi

218、culty of enforcement and the cost to U.S.producers.While the October 7 rules did not say so directly,they also imply the end of a licensing policy based on identifying reliable end users.Chinas publicly articulated civil-military fusion doctrine means that,effectively,there are no longer reliable en

219、d users in China,as all are subject to demands from the government to make their technology and 21|William A.Reinsch,Emily Benson,Thibault Denamiel,and Margot Putnamproducts available for military purposes.The administration has not yet formally taken that step.Instead,it has chosen simply to add co

220、mpanies to its Entity List,effectively denying them“reliable”status.This report does not recommend taking that step at this point,but it is clearly an issue that deserves further consideration.In addition to the export controls,part of the United States strategy is the CHIPS&Science Act,which includ

221、es“guardrails”:provisions restricting the legislations funds from bolstering enterprises that could pose a national security threat to the United States.85 Namely,recipients of CHIPS funding cannot engage in a“significant transaction”to enable the expansion of chip manufacturing facilities in“countr

222、ies of concern,”including China.The“guardrails”provision broadly interprets which chips are critical to national security,working from a Commerce Department list,in coordination with the Department of Defense and the intelligence community,that includes both leading-edge and mature-node chips.In Mar

223、ch 2023,the Department of Commerce proposed an implementation rule that“aligns prohibited technology threshold for memory chips”between export controls and the CHIPS guardrails but also presents a more stringent threshold for logic chips.86In terms of the overall economic health of the industryand t

224、herefore its ability to withstand additional controlsthe data are contradictory.The market is anticipated to shrink by 4 percent in 2023,the first semiconductor market contraction since 2019.This is particularly acute in the memory market and is driven primarily by weakened consumer demand.Gartner p

225、rojects that semiconductor revenue will grow at 7.4 percentsignificantly less than the 2021 growth rate of 26.3 percent fueled by the pandemics accelerated digitization,which pushed the industrys collective annual sales past$500 billion for the first time.87 The surplus in demand caused a shortage c

226、risis,and experts estimate that the global chip shortage cost the U.S.economy$240 billion in 2021.Some U.S.manufacturers had under five days worth of inventory,in comparison to 40 days in 2019.Some firmssuch as Lam and Applied Materials,which are affected by the October 7 controlsanticipate a revenu

227、e slowdown,although it is difficult to determine with certainty what that contraction may look like.However,Lam anticipates a 2023 revenue drop of roughly$2.5 billion,while Applied Materials,the largest chip equipment producer in the United States,could lose$250550 million.88 KLA,meanwhile,anticipat

228、es a revenue drop of nearly$900 million in 2023.89 ASML,Lam Research,and KLA have estimated that the October 7 restrictions would cost them a combined$5.9 billion in lost sales this year alone.90 Another major topic on the horizon is whether,in retaliation for more aggressive allied export controls,

229、China will weaponize the trade of mid-tier chips.Overcapacity of Chinese semiconductors would depress the revenue of non-Chinese firms and potentially usher in a more sustained period of sectoral contraction.Depressed revenue,which additional export controls would also likely facilitate,could lead t

230、o a decline of R&D funding,potentially imperiling long-term innovation in the sector.However,if the implementation of the CHIPS Act occurs quickly enough and companies see returns on their investments,it would better enable them to weather storms from additional controls on exports as well as any in

231、crease in pressure from Chinese overcapacity of legacy chips.One of the issues with the October 7 controls,according to SemiAnalysis,is“that there is no such thing as equipment for 16nm or less or NAND equipment suitable for less than 128-layers,but not more.”91 In other words,equipment used to make

232、 less advanced memory chips could still be used to make cutting-edge semiconductorsalbeit at a much less effective rate.The U.S.government may have to regulate exports of less advanced memory chip processes,such as 64-layer NAND and 20-nm DRAM,to close perceived loopholes in controls.Due to the use

233、of memory chips in a wide array of civilian goods,additional controls would have disproportionate effects on the economy as they could derail large memory manufacturers operations.China represents a large share of global memory chip demand:SK Hynix sold 25 percent of their memory 22|Optimizing Expor

234、t Controls for Critical and Emerging Technologieschips to China,while Micron and Samsung sold China 11 and 10 percent of theirs,respectively,in 2022.These companies memory chips have applications across the civilian economyin passenger vehicles,coffee machines,iPhones,and more.92 They are also essen

235、tial to companies data centers as they are key components of server memory and U.S.organizations IT operations depend on their supply93.For instance,key sectorssuch as telecommunications,banking and financial services,retail and e-commerce,and cybersecurity firmsall require strong server hosting ser

236、vices.94 Pursuing policies that would significantly curtail commercial operations in China could usher in a fresh round of supply chain disruptions at a time when neither U.S.nor EU chips packages have been sufficiently deployed.Since an insufficient amount of production in memory chips has moved to

237、 the United States,the supply chain disruption risks are very high.In considering additional semiconductor controls,the U.S.government will need to determine how the new rules affect U.S.company revenue and whether the rules will push China to accelerate its pursuit of indigenous development.The Uni

238、ted States will also have to evaluate whether the rules will lead to the“designing out”problem,whereby other countries develop products that contain no U.S.technology and are thus outside the reach of U.S.controls.On the U.S.revenue question,while the short-term impact is likely small on chip manufa

239、cturers and large on equipment makers,as the set of controlled items grows,the negative revenue impact will also likely grow(unless they find alternative markets,like India),and U.S.companies could find themselves short of capital unless they can quickly find other markets with similar growth opport

240、unities.This could slow development of future-generation technology and make U.S.companies less competitive.Foreign companies“designing out”U.S.semiconductor manufacturers is already a pressing issue.Commerce Secretary Gina Raimondo has expressed worries about the potential for losing additional U.S

241、.-based chip production,pointing out that chip companies are growing:“Theyre going to build future facilities.theyre not going to build them in America.Theyre going to continue to build them in Asia and in Europe,and we risk losing out on that.”95 Experts have also raised the issue:even before the O

242、ctober 7 controls,the Boston Consulting Group estimated that the“designing out”concern from previous U.S.semiconductor sanctions would lead to drops in revenue,forcing companies to cut in R&D and capital expenditures leading to the loss of 15,000 to 40,000 highly skilled jobs.96 Furthermore,the effe

243、cts of U.S.government spending on chips could be rendered less effective over time if China pursues retaliation via overcapacity of mature node chips.Likewise,as China decreases its dependency on semiconductor imports and the Chinese chip industry continues expanding revenues from its growing traili

244、ng-edge capacity,its homegrown firms have the space to capture market share from U.S.companies.97 Overseas investors have already bought into the idea that Chinese companies will be able to rise to the challenge:Vertex China,for example,raised nearly$500 million for a new Chinese semiconductor fund

245、to fill in the gaps from the U.S.controls.98 Complementing this expansion,China is leveraging specialized education,higher pay,and the hiring of foreign experts to develop its domestic semiconductor innovation landscape and advanced chip manufacturing know-how.99 Another consideration is the porousn

246、ess of controls enforcement.Some controls do not capture all subsidiaries,effectively leaving open a window for firms to acquire controlled items via legal means since their subsidiaries are not covered.CNAS researcher Sam Howell notes that Chinas largest facial recognition startup,SenseTime,has use

247、d the loophole to avoid the October 7 controls by acquiring advanced U.S.chips through subsidiaries.100 This indicates that U.S.exporters that continue to sell chips abroad to subsidiaries may not lose revenue in the short term.If the companies indirectly acquiring their technology from U.S.firms th

248、rough subsidiaries cannot find alternatives,they may be willing to pay more to maintain their supplypotentially raising the revenue of 23|William A.Reinsch,Emily Benson,Thibault Denamiel,and Margot PutnamU.S.firms in the short term.Another way that Chinese entities have circumvented the controls is

249、by using cloud service providers to access advanced chips on which the entities train their language models.For example,the Shanghai-based cloud computing company AI Galaxy has been reportedly charging$10 for one-hour access to eight advanced A100 Nvidia chips,which are critical to developing novel

250、AI applications and services.101 Currently,U.S.export regulations do not cover cloud providers,even if controlled chips are used.This means that the long-term costs of the new U.S.policy may be larger than expected,with them becoming a drag on the U.S.industrys ability to compete while at the same t

251、ime inspiring other entrants into the market that are beyond U.S.control.So far,the controls have resulted in creative workarounds from targeted entities,increased infusion of capital into Chinas advanced capabilities,and novel“design out”attempts.The best action at this point would be to maintain t

252、he October 7 controls but return to the previous policy of treating them as a moving target,which would at least mitigate the revenue and“designing out”issues.This policy would also recognize that Chinas civil-military doctrine forces an end to a licensing policy based largely on reliable end-users

253、and approved end uses.In the interest of providing a greater degree of certainty for U.S.companies,the policy should be clear that the semiconductor controls apply to all end users and end uses in China through a policy of denial of license applications.Such a policy would leave room for an occasion

254、al exception if the U.S.government deemed it in its security interest to permit a specific export.One of the arguments for changing policy to an invariable control level,as was done on October 7,was that since the Chinese had clearly adopted a policy of indigenous innovation,the opportunity to obtai

255、n older technology from Western sources was no longer an incentive to limit their own development.There is merit to that argument,but it also demonstrates that there is no“silver bullet”that will fully control U.S.technology exports at no cost to the domestic industry.That means the best policy is o

256、ne which assesses both costs and benefits to maintain the best benefit-to-cost ratio.This would be best achieved by combining the October 7 controls with a“moving target”framework going forward,along with recognizing the relevance of civil-military fusion to licensing decisions.Artificial Intelligen

257、cePolicymakers typically use AI to refer to computer systems that simulate human-level cognition.102 The National Artificial Intelligence Initiative Act of 2020 defines AI as“a machine-based system that can,for a given set of human-defined objectives,make predictions,recommendations or decisions inf

258、luencing real or virtual environments.”103 The global AI market is estimated to have reached nearly$60 billion in 2021.At an anticipated compound annual growth rate of nearly 40 percent,the market is likely to reach$422.37 billion by 2028.104 There are,however,distinct challenges associated with mea

259、suring the value of the AI industry,such as its widespread use throughout the economy,ranging from social media platforms to autonomous weapons systems.In the AI supply chain,the first stage is the gathering of raw data which is then used as training data for AI models.AI models then train,learn,and

260、 optimize their functionality before being operationalized.While there are certain guardrails that can be implemented in the modeling phase of AI development,export controls in this case would relate to the data used to train AI models in the first place.AI systems can be categorized as narrow AI,ge

261、neral purpose AI,and artificial superintelligence.Narrow AI systems are limited to the tasks that they were trained to perform,while general AI systems can also perform tasks that they were not specifically trained to perform.Superintelligence,on the other hand,has the additional capacity to surpass

262、 human-level cognition while performing most tasks.Though neither general nor superintelligence AI yet exist,these categories of AI would be vastly unpredictable and vulnerable to new types of manipulation,posing distinct threats to the future of military operations.10524|Optimizing Export Controls

263、for Critical and Emerging TechnologiesAside from these three security-focused categories of AI,generative AI can be considered its own category.Generative AI has come under heightened scrutiny recently due to the proliferation of ChatGPT and similar tools.Generative AI is typically used to refer to

264、an algorithm that can use data patterns to create new content,including audio,code,images,text,simulations,and videos.106 In this sense,generative AIs capacities extend beyond those typically thought of as narrow AI.Still,narrow AI systems offer distinct uses in a variety of fields,including intelli

265、gence,surveillance,reconnaissance,logistics,and semi-autonomous and autonomous vehicles.Narrow AI systems can react more quickly than systems that require operator input,analyzing exponentially larger amounts of data.The U.S.government has focused on swarming as a new type of military operation offe

266、red by narrow AI.Swarming involves unmanned vehicles autonomously cooperating to complete a task.Swarming has a wide range of capacities,ranging from small groups of vehicles collaborating for the purposes of electronic attacks,fire support,or localized communication nets to large formations of vehi

267、cles performing operations designed to overwhelm defensive systems.107 AI merits controls because of the distinct national security threats that it poses.Narrow AI has already led to significant military advances.The more novel national security domain created by AI,however,is associated with its ab

268、ility to create and manipulate information.108 This information could be used to deceive key decisionmakers as well as magnify the impact of potential national security threats.In the context of supply chains,there are a few operational definitions of AI.According to the International Trade Administ

269、ration,the AI industry largely consists of“(1)the goods and services that enable AI systems,such as algorithms,data,and computing power,and(2)AI-driven products across all industry verticals,such as autonomous vehicles.”109 BIS first defined AI in 1994,but its 2022 presentation on export controls ou

270、tlines how it currently conceptualizes the field.110 The table below compares this list with the White Houses categorization of AI in the February 2022 Critical and Emerging Technologies List Update.111Comparison:BIS and White House Categories of AIBISWhite HouseNeutral networks and deep learningDee

271、p learningEvolution and genetic computationMachine learningReinforcement learningReinforcement learning Computer vision Sensory perception and recognition Expert systemsNext-generation AI Speech and audio processingPlanning,reasoning,and decisionmaking Natural language processingSafe and secure AIPl

272、anning Audio and video manipulation technologiesAI cloud technologies AI chipsets Source:Tongele N.Tongele et al.,“Emerging Technology Controls”(presented at the BIS 2022 Update Conference on Export Controls and Policy,Washington,DC,June 29,2022),https:/www.bis.doc.gov/index.php/documents/2022-updat

273、e-conference/3073-rev3-emerging-tech-update-2022-section-1758-controls-tongele/file.25|William A.Reinsch,Emily Benson,Thibault Denamiel,and Margot PutnamCompared with the White House categorization of AI,BISs version more explicitly highlights hardware components.In addition to software,AI requires

274、advanced hardware to run algorithms and protect privacy.112 The nature of AI research tends to be collaborative and global,which presents new challenges for export controls.113 For instance,a significant amount of AI code is published on online sources like arXiv.org,which is meant to act as a free

275、distribution service.114 As a result,export controls in the realm of AI typically focus on its hardware components,as demonstrated by the October 7 controls.However,as the encryption and quantum debate highlights,there is an urgent need to develop controls for intangible goods,such as algorithms,sin

276、ce the control of hardware in certain circumstances is insufficient in controlling dual-use algorithms.While AI export controls will certainly impact adversaries,they will also have distinct implications for the U.S.economy.Matt Borman,deputy assistant secretary of commerce for export administration

277、 at BIS,noted that“we would never have a control that covers all of artificial intelligence.That would be completely ineffective and unworkable and,frankly,counterproductive.The way we craft these controls,we try to be as technical as possible so that everybody in the affected community can have a c

278、lear understanding of what is covered and what is not.”115 Export controls on AI capabilities have so far concentrated overwhelmingly on the hardware components that enable advanced AI,although that approach is incomplete.Recently,for example,Chinese AI companies including iFlytek have circumvented

279、the October 7 controls by renting advanced chips through cloud service providers to run advanced AI training models.116 Still,only the White House CET and the Commerce Review of Controls for Certain Emerging Technologies lists explicitly identify AI as meriting its own categorization.Given the intri

280、cacies of controlling this evolving technology,developing uniquely tailored controls for it is critical.Since language models for AI are often publicly available,it is more practical to consider a taxonomy for controlling data,which in the AI supply chain functions as an input.As CSIS has previously

281、 argued,assuming that controlling data is either too burdensome for BIS or that it is a politically unwinnable issue will not result in a more secure digital environment going forward.117 BIS should thus consider building new export control rules for dual-use data flows that feed AI systems,which wi

282、ll be discussed in more detail in a later section.BiotechnologyDemonstrative of the crosscutting nature of data flows,AI,and biotechnology,National Security Adviser Jake Sullivan in his September 2022 speech said,“Computing-related technologies,biotech,and clean tech are truly force multipliers thro

283、ughout the tech ecosystem.And leadership in each of these is a national security imperative.”118 Advances in biotechnology have allowed researchers to create new services and products,providing opportunities for economic growtheconomic activity related to biotechnology and biomanufacturing is referr

284、ed to as“the bioeconomy.”119 As one interviewee for this project noted,there are intersectional considerations at the heart of export controls,data,and these emerging technology case studies.The interviewee said:What technologies need to be mastered to win that game?And what are the threats?DNA read

285、ing and sequencingwho owns those technologies?Who is the best at writing DNAwho can figure out how to put this into cells?Which countries own this right?And then:who owns all the data when you program a cell?AI is a supporting technology to thisrun next to it to see what else you can do.120Recently,

286、the U.S.government has pursued policies on biotechnology to remediate the multifaceted risks of relying on China for this technology as well as its vast dual-use capabilities.In 2018,the U.S.government passed the Foreign Investment Risk Review Modernization Act(FIRRMA),which extended the scope of CF

287、IUSs 26|Optimizing Export Controls for Critical and Emerging Technologiesreview to the biotechnology sector.Further,to spur U.S.investment in biotechnology,President Biden signed an executive order,“Advancing Biotechnology and Biomanufacturing Innovation for a Sustainable,Safe,and Secure American Bi

288、oeconomy,”in September 2022,which underscores the administrations elevation of biotechnology as a sector key to U.S.national security concerns.The executive order aims to use biotechnology and biomanufacturing as vehicles for addressing health,climate change,energy,food security,and national securit

289、y issues.One of its primary objectives is to“bolster and coordinate Federal investment in key research and development(R&D)areas of biotechnology and biomanufacturing in order to further societal goals.”121 In addition to“running faster”policies in the bioeconomy,the administration has also applied

290、new export controls to biotechnologies.In November 2018,BIS designated biotechnology as an emerging technologywhich now accounts for 2 of the 38 emerging technology controls.In February 2022,BIS added Chinas leading contract drugmaker,WuXi Biologics Co.,Ltd.,to the Unverified List,along with one of

291、its subsidiaries.122 WuXi Biologics lost a fifth of its market value in one day.It has since been removed from the list.Despite the edge,this may have provided to U.S.competitors,investment banking group Jefferies has found that replacing Chinese drugmaker production would cost the United States$18

292、billion,not accounting for annual labor costs.Controls on biotechnology thus face the obstacle of remaining strict enough to protect national security but sufficiently flexible to facilitate further growth in a robust non-military economy.Commensurate with the growing recognition of biotechnology as

293、 a key industry of the future is growing concern that the proliferation of biotechnology as a weapon poses serious national security risks.A foreign adversary could bioengineer a super pathogen and plant it in an environment that makes it difficult to identify.For example,warming temperatures in the

294、 spring and summer in Ukraine could lead to a cholera outbreak.A foreign adversary could bioengineer a strain of cholera that would make the outbreak magnitudes deadlier and nearly impossible to identify as an attack.Another potential application of biotechnology is a foreign adversary gaining acces

295、s to DNA.In February 2021,the National Counterintelligence and Security Center raised the concern that since 15 Chinese companies are licensed to provide genetic testing or genomic sequencing on U.S.patients,Chinese firms could directly access Americans genetic data.123 This would potentially enable

296、 China to develop pathogens specific to parts of the U.S.population or,more likely,to use DNA information as blackmail against people in power.For example,a foreign adversary could predict that a politicians child is likely to develop cancer and offer to preemptively cure the cancer in exchange for

297、political concessions.Recent conversations around brain computer interface(BCI)also highlight the enormous complexities involved with designing export controls.For example,with BCI,a brain could be made to“drive”an autonomous vehicle,even if the person is not physically inside the vehicle.124 BIS un

298、dersecretary Alan Estevez has likened BCI to a“superman in combat.”125 While brain computer interface(BCI)technology has extensive military capabilities,it also has the potential to assist people with ALS and other diseases.126With BCI,the benign applications probably outnumber the military ones,whi

299、ch also seem largely theoretical at this point.The dilemma of these technologies is that in each case,there is a non-zero possibility of malign use.No matter how“civilian”it appears,there is always some application that could compromise security,even if it is decades away.Over-controlling BCI during

300、 its nascence could imperil vital medical advances that could significantly improve the lives of people living with ALS and other diseases.It is thus incumbent on BIS to determine what risks the proliferation of this technology would entail,and whether they would warrant a possible delay in medical

301、advancements.Minimizing security harm 27|William A.Reinsch,Emily Benson,Thibault Denamiel,and Margot Putnamwhile utilizing the medical innovations of BCI is a direct example of the ethical dilemmas involved in the implementation of export controls on biotechnology.The development and use of biotechn

302、ology are constrained by two key chokepoints.The first and most obvious is the people who are involved in the development of biotechnology advancements with national security implications.Much like enhancing hardware involves cross-border technology transfers,know-how is best developed by cultivatin

303、g talent from multiple countries.Biotechnology has benefitted from knowledge-sharing among the international community:U.S.research institutions specializing in the field,such as the National Human Genome Research Institute,count on researchers from abroad to contribute to their work.Exchanging info

304、rmation about technology with foreign individuals,however,can be considered an export even if it takes place on U.S.soilclashing with export controls meant to curb transfers of knowledge to entities of concern.Moreover,restricting these“deemed exports”is a difficult undertaking for U.S.authorities.T

305、he dilemma of these technologies is that in each case,there is a non-zero possibility of malign use.No matter how“civilian”it appears,there is always some application that could compromise security,even if it is decades away.AI and data experts remain suspicious of the more hawkish claims about the

306、need to control biotechnology inputs because early identification of cancer,for example,requires the precise convergence of several data sets.For example,an accurate assessment of someones health requires not only the data available via health tracking apps but also information about their exercise

307、routines,smoking habits and drug use,as well as their food intake and periodic check-up information.While it is theoretically possible that an adversary could gain access to these datasets simultaneously,it is a stretch of the imagination to regard that possibility as a present threat.At the same ti

308、me,these technological advances also hold the promise of positive medical benefits,which complicates efforts to block their proliferation.The more alarmist examples of potential national security implications of biotechnology often point to their weaponized uses.The Australia Groupthe multilateral e

309、xport control regime responsible for coordinating control of bioweaponsalready maintains the architecture capable of housing international discussions to stem the proliferation of dangerous bioweapons.In the examples above,the case of bioengineering a“super cholera”in Ukraine is clearly a weapon and

310、 would fall under the Australia Group,whereas using personal data as blackmail is less clearly a weapon and therefore may merit the application of dual-use controls.Rather than design a new set of controls on U.S.exports relevant to biotechnology,the U.S.government should work within the Australia G

311、roup to multilateralize controls on bioweapons.To the extent that the United States is not satisfied with work within the Australia Group,it could expand its controls on data and knowledge transfers,which are discussed in detail below.Nevertheless,regulating the bioeconomy from a dual-use perspectiv

312、e fits squarely under the banner of export controls.Because not all genetic data is the same,the treatment of data in the bioeconomy needs to be sufficiently narrow.For example,certain healthcare dataDNA sequencing during pregnancy,for examplegoes to a clinical diagnostic setting.Other types of data

313、 are used in government-sponsored research initiatives 28|Optimizing Export Controls for Critical and Emerging Technologiesand are clearly noncommercial in nature.Both of these examples contrast with data shared in applications like 23andMe,in which companies(in this case a foreign-owned company)are

314、 profiting from U.S.personal data that a foreign government could access and then leverage for nefarious purposes.127 There are also profound concerns about the ability to control populationsfor example ethnic minorities,such as the tactics used to track Uyghur Muslims in Xinjiangthrough the use of

315、DNA data.128 Recent changes to regulatory regimes governing health data represent a step in the right direction.For example,the Department of Justices Trusted Exchange Cooperation Agreement encourages health institutions to join a network of trusted partners,elevating standards on exchanging data.Ho

316、wever,this is probably insufficient in the long run and falls short of a hard regulatory mechanism like export controls,as these that would create a formal notification and licensing regime for outbound personal data flows,which is discussed in further detail below.In short,BIS should implement a ne

317、w rule that would require exporters of personal sensitive biological data to obtain an export license for data flows with national security implications.This includes data about gene sequencing,for example,that could be used to control populations or aid the development of a bioweapon,such as a supe

318、r strain of cholera.There will emerge instances in which it is vital that healthcare data flow freely,as exemplified during the early stages of the Covid-19 pandemic.In these instances,BIS should create an exemption process for healthcare data to move freely across borders in cases in which the heal

319、th security of the U.S.population is directly imperiled by pathogens or other risks.Intangible GoodsIf World War I was a war of chemistry,and World War II was a war of physics,twenty-first-century conflicts will showcase the weaponization of data.Yet,an obvious feature of the above categories is tha

320、t they often lack considerations for the control of intangible goods and their inputs,despite the inherently nonphysical nature of many of the dual-use items covered in export control and technology lists.Intangible goods can include everyday items such as digital music files or non-fungible tokens;

321、on the other hand,they can also include AI-enabled software that tracks the movement of people,guides advanced weapons systems,and builds algorithms that can sway voters.In addition to supporting hardware,other enablers of AI deserve consideration for controls.These include AI development tools,trai

322、ning datasets,and machine learning models.Enhancing controls on intangible goods also aligns with the administrations National Security Strategy.In the National Security Strategy document,the Biden administration writes,“We will also work to counter the exploitation of Americans sensitive data and i

323、llegitimate use of technology,including commercial spyware and surveillance technology,and we will stand against digital authoritarianism.”129As the above examples demonstrate,there is a clear linkage between hardware and software applications,and many data-driven malicious behaviors do not require

324、advanced computers.The use of micro-data for targeting civilians(“hacking the consciousness”)can be carried out with relatively light combing of personal user data.This tactic was used in the Brexit vote and the 2016 U.S.presidential election,and combating it is likely to become an integrated part o

325、f electionand therefore nationalsecurity around the world.130 The algorithms used to target voters in these cases are the same ones that can sell cheaper products to consumers or help them more easily find a location on Google Maps,highlighting the dual-use nature of these intangible goods.One examp

326、le of an intangible good that deserves far more consideration for controls by the United States government is Pegasus spyware and its equivalents.The NSO Groups Pegasus Software,which the New York Times describes as“the worlds most powerful cyberweapon,”has stimulated conversation regarding 29|Willi

327、am A.Reinsch,Emily Benson,Thibault Denamiel,and Margot Putnamthe unprecedented capabilities of digital spyware.131 NSO Group is an Israel-based company that licenses surveillance software to government agencies.NSO argues that Pegasus prevents the ability of criminals and terrorists to go“dark”with

328、encryption technology.Spyware operates by infiltrating digital devices without phishing tactics.Once contact is made with a cell phone,for example by sending a text message,even if the user does not click on or open the message,the spyware can still be installed.Even if the device is powered down,th

329、e spyware can remotely turn on its recording capabilities,including its video recording device.Potentially more dangerous,however,is that Pegasus can infiltrate apps on devices,downloading entire email,message,and communications history,even in encrypted apps like WhatsApp and Signal.This creates a

330、massive vulnerability for blackmail and the overall security of digital communications.Pegasus has been under scrutiny for years.132 In October 2019,WhatsApp sued NSO Group for exploiting its services to spy on 1,400 phones.In November 2021,the Biden administration placed NSO on the blacklist.133 An

331、d,in November 2022,Apple sued NSO Group in an attempt to block Pegasus from Apple devices.134 However,it is intrinsically difficult to control,and though Pegasuss capabilities have received a significant amount of media attention,it is not the only software that provides these spyware services.The E

332、uropean Parliament has also stood up a special investigative committee to evaluate the geopolitical risks of Pegasus.135In 2020,BIS implemented new controls on emerging technologies agreed to during the 2019 Wassenaar Arrangement plenary.One of these categories includes“digital forensics tools that

333、circumvent authentication or authorization controls on a computer(or communications device)and extract raw data.”136 This rule added 5D001.e technology control for surveillance software.137 In March 2023,the Biden administration signed an executive order to ban the U.S.government from using commercial spyware that might present risks to national security or human rights.138 At the same time,the U.