Technology Business Roundtable Comments on the Advance Notice of Proposed Rulemaking (ANPRM) regarding the Review of Controls for Certain Emerging Technologies

Jan 12, 2019

Dear Assistant Secretary Ashooh:


Business Roundtable appreciates the opportunity to comment on the Advance Notice of Proposed Rulemaking (ANPRM) regarding the Review of Controls for Certain Emerging Technologies.  


As the Bureau of Industry and Security (BIS) considers criteria for identifying emerging technologies that are essential to U.S. national security, Business Roundtable urges the Administration to work with industry to ensure that the criteria carefully consider the essential national security and competitive value of different technologies as well as the issue of how potential export controls could affect U.S. technological leadership. For example, artificial intelligence (AI) is a powerful “general purpose” technology with potential applications in nearly every segment of the economy. This breadth of possible applications means that the impacts of AI will be far-reaching and unconstrained by traditional dividing lines between sectors and supply chains. 


Business Roundtable shares the Administration’s objective of enhancing U.S. national security. To meet this goal, Congress has authorized BIS to develop criteria that identify specific emerging technologies essential to national security and to establish appropriate controls. Modernizing

 

the control regime for U.S. and global technology will be vital to technology and defense companies. But many other industries will also be affected, including basic and advanced manufacturing; financial, professional; and other services; telecommunications, biomedical, and retail, among others. 


To strengthen national security and maintain U.S. global competitiveness, Business Roundtable encourages the Administration to use its emerging technology export control rulemaking process to (i) take a narrowly tailored approach; (ii) avoid imposing unilateral controls in favor of multilateral controls (iii) coordinate closely with allies and other countries; and (iv) consult closely with industry at each step of the rulemaking and implementation process. Such an approach will best meet the policy goals set forth in the Statement of Policy of the Export Control Reform Act of 2018 and: 


  • ensure that the United States maintains its leadership in the science, technology, engineering and manufacturing sectors, which requires that U.S. businesses remain competitive in global markets; 
  • use export controls only after full consideration of the impact on the U.S. economy; 
  • ensure that the export control system is transparent, predictable and timely, and provides clear guidance on controls to both government and non-government entities; and 
  • keep any new controls narrowly tailored to facilitate U.S. participation in and coordination with multilateral export control organizations, agreements, and control regimes.


Establishing overly broad criteria to determine if a specific technology is essential to national security could undermine rather than strengthen U.S. national security and compromise U.S. competitiveness and global leadership in innovation. Business Roundtable recommends that the Administration consider drawing on experiences with the current export control regime to narrowly tailor criteria for emerging technology to best achieve the underlying policy objectives laid out in the Export Control Reform Act of 2018.  


First, the Administration should adopt a highly targeted approach that takes account of foreign availability of similar technology. Unilateral export controls on products that are available on the global market would not enhance national security but would likely cause U.S. companies to lose significant global market share to European and Asian competitors. Even if exports were subject to a licensing requirement rather than an outright ban, the heightened uncertainty and increased regulatory and compliance costs for companies would reduce the effectiveness of global controls for businesses with global operations and could harm U.S. companies’ competitiveness. 


For example, previous unilateral U.S. controls on satellite technology under the International Traffic in Arms Regulations (ITAR) were found to have hurt U.S. manufacturers relative to European and other foreign competitors whose products were not subject to similar controls. In April 2012, the Departments of State and Defense issued a joint report to Congress finding that the control of commercial satellites and related items under ITAR was harming the U.S. space industrial base. In addition, the report found, easing those controls would support the competitiveness of U.S. companies in those sectors and therefore the national security interests of the United States. 


Second, any new controls should be coordinated with allies, as Congress required, and any new controls should be expeditiously brought into multilateral export control regimes to minimize the duration of unilateral controls. A multilateral approach will also advance national security objectives by preventing controlled technology from falling into the wrong hands. Moreover, the Administration should implement any new export controls consistent with U.S. obligations and commitments under international agreements.


Importantly, narrowly targeted and well-defined export controls can facilitate cooperation with allies and the integration of new controls into the multilateral regimes. For example, a 2002 report from the Government Accountability Office found that U.S. policies and practices to control the export of semiconductor technology to China were “unclear and inconsistent,” because the U.S. regulations did not describe with specificity the level of technology that could be exported. This lack of specificity led international partners and parties to the Wassenaar Arrangement not to enforce similar controls, which meant that China’s ability to obtain the equipment was unimpaired while U.S. manufacturers lost global market share to Japanese competitors. 


Finally, the Administration should develop the criteria in close cooperation with industry, helping to avoid unintended consequences for U.S. innovation and economic competitiveness. Overly broad or unilateral controls could make it difficult for U.S. companies in a wide range of sectors to recruit and retain top-caliber talent from all over the world. Further, such controls could prevent U.S. companies from deploying technology developed in the United States on their global platforms, which could discourage companies’ willingness to invest in U.S.-based R&D and thereby undermine U.S. innovation and technological leadership. Such controls could also lead foreign equipment manufacturers to “design out” U.S. components to avoid the burden of compliance, which would in turn undermine U.S. global competitiveness.


In summary, establishing criteria that could lead to new controls on emerging technologies should both enhance U.S. national security and support U.S. competitiveness and innovation. Business Roundtable CEOs and their companies look forward to working with the Administration at every step in the process to develop well-defined criteria to identify specific emerging technologies and inform targeted export controls that can be adopted by the multilateral export control regimes. 


U.S. innovation and competitiveness depends on U.S. companies developing, adopting and deploying emerging technologies. Moreover, as Congress stated in Sec. 1752(4) of the Export Control Act of 2018, “The national security of the United States requires that the United States maintain its leadership in the science, technology, engineering, and manufacturing sectors, including foundational technology that is essential to innovation.” As BIS develops criteria to assess whether a specific emerging technology is essential to national security, the criteria should promote both U.S. economic leadership in innovation and the country’s national security.


Thank you for your consideration.


Sincerely,


Paul H. DeLaney, III

Vice President, International Engagement

Business Roundtable