Exclusive: U.S. initial crackdown on advanced tech
exports appears more restrained than feared
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[December 17, 2019] By
Alexandra Alper
WASHINGTON (Reuters) - The Trump
administration is finalizing a set of narrow rules to limit exports of
sophisticated technology to adversaries like China, a document seen by
Reuters shows, in a boon to U.S. industry that feared a much tougher
crackdown on sales abroad.
The Commerce Department is putting the finishing touches on five rules
covering products like quantum computing and 3-D printing technologies
that were mandated by a 2018 law to keep sensitive technologies out of
the hands of rival powers.
Before drafting the rules, Commerce sought industry comment last year on
a raft of high-tech sectors that it could cover under the law, from
artificial intelligence technology to robotics. That fueled concerns
among U.S. businesses the department would craft broad, tough
regulations that would stymy a host of exports to key customers.
But the internal status update seen by Reuters shows for the first time
that Commerce is finishing a first batch of rules that touch on just a
few technologies that will be proposed to international bodies before
taking effect, a reprieve for U.S. companies.
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"Based on their titles, the rules appear to be narrowly tailored to
address specific national security issues, which should go a long way to
calming the nerves of those in industry concerned that the
administration would impose controls over broad categories of widely
available technologies," said Kevin Wolf, former assistant secretary of
commerce for export administration.
Commerce declined to confirm any details but said it has a number of
proposed rules in the review process.
Despite the apparent reprieve, Commerce could issue more rules in the
future regulating sales abroad of cutting-edge items. The document
failed to outline when the rule proposals would be made public or what
the controls would look like for specific countries, buyers and uses.
In a move that should appeal to U.S. firms, the rules will be submitted
to international bodies for approval so that they may be implemented
overseas, not just by the United States. That would establish a level
playing field for U.S. companies abroad, but would also take much longer
to review and go into effect, likely until mid-2021 at the earliest.
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Commerce is expected to seek industry comment on the rules before
submitting them to the groups, a source said, adding that a sixth rule,
covering artificial intelligence, will go into effect in the United
States without a comment period.
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An internet LAN cable is
pictured in this photo illustration taken in Sydney June 23, 2011.
REUTERS/Tim Wimborne/File Photo
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The revelations come amid growing frustration from Republican and Democratic
lawmakers over the slow pace of the rule roll-out, with Senate minority leader
Chuck Schumer urging the Commerce Department to speed up the process.
In a statement to Reuters, Republican Senator Tom Cotton said he was
"disappointed at the lack of political will" at the Commerce department,
accusing it of a "troubling" lack of urgency.
"While bureaucrats and industry shills twiddle their thumbs, the Chinese
Communist Party continues to purchase sensitive U.S. technologies with clear
military applications," he said. "I will be digging deep into the Commerce
Department's actions."
According to the status update, the agency plans to regulate exports of quantum
diluted refrigerators, which are used to keep qubits cold in some quantum
machines. Qubits are used in quantum computers to perform calculations that
would take conventional computers thousands of years.
Major makers of the refrigeration devices include U.K.-based ICE Oxford,
Finland-based Bluefors and U.S.-based Janis Research. The rules would apply to
exports of goods from the United States as well as shipments of items made
abroad that contain a significant amount of U.S. technology or components.
That rule was sent to the Commerce Department's Office of Policy and Strategic
Planning on Nov. 19, along with another rule regulating 3-D printing for
explosives, the document shows.
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Another regulation on exports of the so called "Gate-All-Around Field Effect
transistor technology, which is used to manufacture semiconductors, was awaiting
comments from other agencies on Dec. 5.
The transistors are expected to play a major role in newer, faster
semiconductors that are under development by Taiwan Semiconductor Manufacturing
Co <2330.TW>, Samsung Electronics Co Ltd <005930.KS> and Intel Corp <INTC.O>.
Two other rules would regulate chemicals used to make Russian nerve agent
Novichok and single-use chambers for chemical reactions.
(Reporting by Alexandra Alper; Additional reporting by Stephen Nellis in San
Francisco; Editing by Chris Sanders and Lisa Shumaker)
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