Dual-Use Free Trade Agreements: The Contemporary Alternative to High-Tech Export Controls
Klaus, Michael D., Denver Journal of International Law and Policy
In the modern global economy, U.S. export controls crafted during the height of the Cold War (1) are failing to forestall the transfer of advanced dual-use technology (2) to potential adversaries: China secured the necessary equipment to construct semiconductor manufacturing facilities capable of revolutionizing the People's Liberation Army, (3) Russia deployed an extensive fleet of intelligence satellites using its own technology, (4) and with sufficient financial resources, countless other foreign militaries are capable of building competitive communicants, remote sensing, and navigation satellites without U.S. components. (5) Since the U.S. no longer maintains a monopoly on the world's most sophisticated technologies, (6) unilateral restrictions on high-tech exports are more prone to impairing U.S. corporations than protecting national security. (7) Despite intense lobbying campaigns of industry representatives, (8) Congress has repeatedly eschewed substantive revisions to U.S. export administration regulations, (9) thereby prolonging the futile effort to impede the technological advancements of distrusted foreign nations by restricting U.S. exports.
China's astonishing technological and military advancements lie at the center of the export control debate as U.S. exporters demanding opportunities to sell advanced technology to China's explosive high-tech industries clash with policy analysts apprehensively forecasting strategic concerns in the Taiwan Strait. (10) Favoring the dynamic national security concerns, the U.S. restricts exports of dual-use technology (technology that can be used for commercial or military purposes) to China under U.S. Export Administration Regulations, (11) although few other governments impose such cumbersome rules. (12) Consequently, foreign corporations are securing lucrative high-tech contracts, U.S. exporters are losing billions in sales, (13) and China is rapidly acquiring the advanced technology that it desires to build a formidable modern military. (14)
While export controls defy the fundamental tenets of the global marketplace, ongoing negotiations for free trade agreements (FTAs) (15) with Chile, Singapore, and Latin America embrace the global competition that is rendering export controls obsolete. (16) The Bush administration's ambitious campaign to negotiate FTAs hails the economic and political benefits for parties to the agreements, (17) but on a global scale, the effects of U.S. free trade agreements on China's developing high-tech sectors must also be considered. Judging by the aftermath of the U.S.-Jordan free trade agreement signed in 2001, (18) as an economic matter, budding high-tech centers in countries with which the U.S. has a free trade agreement attract immediate investments from U.S. companies and once U.S. investment facilitates further development, foreign investment follows. (19) Unlike existing export controls, the secondary result of such a strategic free trade agreement is that increased competition in technology markets siphons some dual-use technology investments from China, thus mitigating the national security risks of burgeoning technology bases in the control of a potential foe without undermining U.S. economic interests. (20)
To establish a practical frame for the defense trade policy debate, this article begins by presenting the extraordinary growth of China's semiconductor industry and the military applications of China's emerging technologies. After evaluating the relevant technology, Part Two outlines the history of U.S. export controls under the Export Administration Act and surveys the persisting fears concerning China's unprecedented military advances. Finally, Part Two discusses attempts to control dual-use technology exports on an international level during the Cold War era via the Coordinating Committee for Multilateral Export Controls (CoCom) and during the post-Cold War era through the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Technologies. …