Industry Warns Against Broad Export, Investment Controls Over ICT Goods
The Commerce Department should tread carefully when imposing new export controls, foreign investment restrictions and limits on standards collaboration, which may jeopardize the U.S.’s position in global information and communications technology supply chains, U.S. companies and trade groups told the agency this month. Some of those regulatory restrictions are already having chilling effects on U.S. competitiveness, they said, as foreign firms and countries can quickly fill voids in overseas markets and leadership positions in global standards bodies.
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Several companies and trade associations, writing to the Bureau of Industry and Security Nov. 4 about issues in ICT supply chains (see 2109170029), said export controls over sensitive ICT goods risk undermining U.S. technology leadership. New controls and export compliance requirements may “inject uncertainty” into those supply chains, the Information Technology Industry Council said, specifically warning against overbroad controls on emerging and foundational technologies (see 2110280040).
Export restrictions on ICT products, components and software “could exacerbate current U.S. supply chain resiliency challenges by making it more difficult for companies to develop, assemble, or manufacture ICTS products overseas that are needed in the U.S. market.” ITI said. The U.S. Chamber of Commerce also warned against “overly restrictive barriers to the development and trade in technology,” which may help address national security issues in the short term but could make supply chains “less secure” in the long term.
Several companies urged the U.S. to pursue controls alongside allies, which can “encourage best practice and technology-enabled supply chain risk mitigation measures,” Microsoft said. “The U.S. cannot expect to retain its technological leadership, much less strengthen it by enhancing U.S companies’ ability to create and sell sensitive or critical ICT technologies, if U.S. industry is subject to overly restrictive measures that could stall or halt important aspects of its business,” the technology company said.
It specifically warned against “overly aggressive implementation” of the Information and Communications Technology and Services (ICTS) rule (see 2104290065), which could “raise doubts in the minds of foreign customers” about whether U.S. technology companies can be reliable suppliers. “If U.S. companies fall behind in key markets as a result,” Microsoft said, “their place will quickly be filled by others.”
Restrictive and broad export controls can also chill foreign investment in the ICT sector, wireless trade group CTIA said. Since the implementation of the Foreign Investment Risk Review Modernization Act in 2020, the Committee on Foreign Investment in the U.S. has broader jurisdiction to review investment deals involving certain critical technologies, which include emerging and foundational technologies controlled by BIS (see 2103030057).
“Overly broad regulation in areas such as export controls ... could make these investments less attractive and shift investment away from the U.S. to rival countries,” CTIA said. “[T]he federal government should not pursue restrictive policies that could have an outsized impact on foreign investment in this sector.”
The U.S. should coordinate its investment restrictions with partners, including the European Union, the Coalition of Services Industries said. The group applauded the formation of the U.S.-EU Trade and Technology Council earlier this year, which has agreed to more closely align export control and investment screening regulations.
“The government should avoid taking unilateral actions that would disadvantage exports from U.S. companies while competitors in allied nations are allowed to continue selling the same products and services into the global market,” the coalition said. “Such an outcome would needlessly handicap U.S. industry without yielding improvements in security.”
While Huawei didn’t specifically mention export controls in its comments to BIS, it did criticize the U.S.’ “interventionist, transactional-based, and categorical country-based approaches” to trade restrictions, particularly as they apply to ICT goods. “Country-based categorical exclusions of particular suppliers are short sighted,” the Chinese technology company said, “and do little to address the actual risks from a global supply chain perspective.” BIS didn’t comment.
Several trade groups also said Commerce can do more to encourage U.S. participation in international standards-setting bodies for ICT goods and other sensitive technologies. U.S. businesses “should be able to champion their innovations globally based on industry-driven global consensus standards,” CTIA said, but past BIS actions “have threatened to chill participation in global standards activities.” Technology groups have lobbied BIS to establish a blanket exemption for U.S. people and companies to participate in standards-setting bodies that have members designated on the Entity List (see 2109150036) after the agency issued a similar exemption for Huawei last year (see 2006160035).
“The U.S. cannot afford to cede global standards to other countries by imposing onerous burdens on the export of U.S. technology and knowledge,” CTIA said. “The consequences of neglecting standards work could be severe.” BIS has been working on a final rule to clarify how export restrictions apply to the release of controlled technology at standards-setting organizations (see 2012150037).