Export controls and the US-China tech war: Policy challenges for Europe

Noah Barkin (Mercator Institute for China Studies – MERICS)

Main findings and recommendations

With the rollout of export controls on emerging technologies starting in 2020, the United States has opened a new front in its confrontation with China. This marks a shift from defensive measures to more offensive tools.

Over the past year, the US has engaged in an aggressive campaign to convince European partners to ban Chinese suppliers from their 5G networks. Its push to curb the transfer of sensitive technologies to China risks becoming a new source of transatlantic tension in the years ahead.

In a world of deeply integrated, global supply chains, European governments view export controls as a blunt instrument for tackling the risks tied to new technologies. They are skeptical about the US administration’s aims, seeing controls as part of a broader push to contain China.

Despite this scepticism, European countries can neither ignore the US push nor refuse to engage with Washington as it presses ahead with its plans. On the contrary, Europe must formulate its own, considered approach to the transfer of sensitive technologies. Affected member states must coordinate their work more effectively and consider giving the European Commission a broader mandate, as they have done on investment screening and 5G.

The EU faces unique structural hurdles in responding to the US push to restrict emerging technology transfers. Despite a years-old legislative push to reform the EU’s dual-use regulations, the bloc still has a weak mandate on export controls and limited scope to ramp up its scrutiny of emerging technologies.

The EU and its member states are not well positioned to address highly complex policy questions at the nexus of technology and security. While officials in some member states have begun to wrestle with these questions, there is a lack of high-level political attention, hindering progress, and leaving the bloc vulnerable.

The United States has been reaching out to allies on a bilateral basis and in various ad-hoc and established forums, including multilateral regimes like the Wassenaar Arrangement, to get their buy-in. But there is a risk that Washington loses patience with Europe and other allies if they move too slowly and goes down a unilateral path. This could expose European companies to secondary sanctions.

Those EU states that are most affected should consider creating new structures to address risks at the intersection of trade, technology and security. They should formalise coordination and information exchange with other EU governments and ensure this exchange is grounded in a European process involving the Commission, which needs a more robust mandate to tackle the growing emerging technology challenge.

States should accelerate efforts to bring outside experts from business and academia into the policy discussion. And they need to establish a more regular, structured dialogue on emerging security challenges with partners outside of Europe, particularly in Asia.

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