Export Controls 'Chilling' Standards Work

- The U.S. Department of Commerce's Bureau of Industry and Security (BIS) has placed numerous Chinese technology companies on its Entity List, restricting their access to U.S. technology and complicating their participation in standards-setting bodies. This has led to confusion and has handicapped U.S. participation in some organizations, encouraging China to create domestic alternatives to international standards. - In response to export controls, Chinese firms affected by the restrictions have increased their R&D spending by an average of 16.6% as a percentage of revenue in the year the controls were introduced, accelerating domestic innovation. This push for technological self-sufficiency has led to a rise in technology transfer transactions as Chinese companies acquire or license foreign technology to ensure continuity. - From 2011 to 2021, the number of Chinese-held secretariat positions in technical committees or subcommittees at the International Organization for Standardization (ISO) increased by 58%, and by 67% at the International Electrotechnical Commission (IEC) from 2012 to 2020. This contrasts with relatively flat leadership participation from the U.S., Germany, and Japan during the same period. - The U.S. government has recognized the negative impact of export controls on standards participation and has taken steps to mitigate it. In July 2024, the BIS issued a rule to ensure U.S. companies can participate in international standards development without being unreasonably hindered by export controls, particularly in areas like biotechnology, quantum information, and communication technologies. - Geopolitical tensions are increasingly turning the historically apolitical domain of technical standards into a battleground. This has raised concerns that the international standardization system, which is based on principles of consensus, openness, and transparency, may be fracturing. - The U.S.-EU Trade and Technology Council (TTC) is a key forum for cooperation on trade and technology, including coordinating on export controls and international standards. Both the EU and the U.S. have recently released standardization strategies that integrate geopolitical considerations and aim to bolster their respective influence in global technical standards development. - While facing exclusion in some Western-led forums, China has explicitly stated its opposition to the exclusion of Russia from international platforms like the G20, signaling a commitment to alternative geopolitical alignments. - The impact of these controls extends beyond semiconductors and AI to legacy industries like encryption, which affects nearly all commercial software products. These broad restrictions can disrupt global supply chains and may inadvertently stifle global technological progress in critical areas.