Russia Controls Setting Precedent for Future Multilateral Responses, Commerce Official Says
The Commerce Department is prioritizing work to strengthen its export controls and investment restrictions, particularly with allies, Commerce Deputy Secretary Don Graves said, speaking during a July 25 event hosted by the Center for Strategic and International Studies. He said the U.S. is continuing to rethink the existing multilateral control regimes and believes the global sanctions response to Russia has set a precedent for how democracies could respond to similar aggression by other countries in the future.
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Graves said the export restrictions aimed at Russia have shown a “very good example of the way that we can build a framework of like-minded countries,” especially to “really stick it to countries that engage in physical intimidation or in military action or economic coercion.” Although Graves didn’t specifically point to China, experts believe Beijing could face a large export control and sanctions response if it invades Taiwan (see 2206210018 and 2206100021).
Graves said the multilateral response to Russia is “a bit of a warning to countries that might seek to engage in these types of things.” He specifically referenced the U.S.-EU Trade and Technology Council -- which is running as a forum for both sides to share information on export licensing and investment restrictions (see 2206300033) -- and the Indo-Pacific Economic Framework. “Whether it's economic coercion or some type of military action,” Graves said, “they know that we built partnerships that will stand the test of time, and that we will be prepared to use them if we have to.”
Graves stressed the U.S. is hoping to continue to expand those partnerships, including through new multilateral control frameworks. Those frameworks could lead to a new, formal regime, similar to the Wassenaar Arrangement, Graves said, or to “virtual arrangements,” similar to the TTC.
He said Russia, which is a member of Wassenaar and other control regimes, has been able to hold them “hostage.” Wassenaar doesn’t currently have a process to remove a member.
“That poses real problems in being able to develop and utilize this tool in an effective way when you need to use it against this type of unwanted aggression,” Graves said, “such as for Russia.” Commerce has stressed the importance of creating a new multilateral export control framework (see 2206290032 and 2207010012).
But Graves also called export controls a “balance,” saying the U.S. must tailor the controls in ways that minimize their impact on allies. “You use the tool of export controls as the hammer, if you will, but you also have to find ways to make things easier for your partners and allies,” he said. The U.S., for example, is “making sure that we're moving as quickly as we can” to support the EU’s energy requirements as the bloc tries to reduce its dependence on Russian oil.
The U.S. wants to export more liquefied natural gas to Europe and is also working with allies around the world, including from Asia and the Middle East, to “make up some of their energy needs,” Graves said. “So it's continuing to find ways to mitigate supply chain issues while at the same time continuing to use that export control tool.”
Commerce is also focused on strengthening its unilateral protections around sensitive technology, Graves said, specifically pointing to the Committee on Foreign Investment in the U.S. He also said the agency is working with the SEC to make sure it has “all of the relevant information it needs as it’s investigating companies that are seeking to buy other companies or technologies.”
“Coordination is the key, though,” Graves said. “Frankly, there are back doors that our adversaries are likely using by going through our partners that don't have the same strength of their tools that we do. And so the more that we can do to share information to partner and collaborate, the more effective we're going to be.”