This essay is part of a series that highlights the main takeaways from discussions that took place at Carnegie India’s eighth Global Technology Summit, co-hosted with the Ministry of External Affairs, Government of India.
Until recently, discussions regarding security and commerce mostly straddled two separate paths in the world of export controls. Stringent export controls on technological items were implemented only in cases where they presented adverse implications for national security, which was rare. For the better part of the post–Cold War era, companies were allowed to export high-technology items. This era even saw the dismantling of the Coordinating Committee for Multilateral Exports (COCOM), a multilateral system for implementing export controls. The committee had served as an extension of U.S. export control policy by ensuring that certain technology shared with its European partners could not be accessed by the Soviet Union. However, U.S. national security objectives have now taken precedence over the commercial considerations of American companies, as declared by U.S. National Security Advisor Jake Sullivan recently.
This is the new normal, especially due to the U.S. export control measures unveiled from October 2022 onward, which target China’s semiconductor and artificial intelligence (AI) industries owing to the country’s military-civil fusion (MCF) program. Under the MCF, innovations in civilian and commercial technologies can be utilized for military purposes as well, thereby blurring the line between research for civilian and commercial purposes and research for military applications.
However, while the United States tweaks and iterates its export control measures, it has also faced the concerns of its allies and the high-technology industry alike. These concerns include the extraterritorial application of U.S. export control laws, which forbid allies from exporting certain technology to the targeted entities. Sometimes, allies may not be kept in confidence before such export control measures are issued. For American industry, both the U.S. export control measures and even the U.S. CHIPS and Science Act have restricted the size of the Chinese market that could have been serviced.
The Case for COCOM 2.0
In this context, could reviving a COCOM-like arrangement solve the grievances of both U.S. allies and the American industry? Currently, there is a lack of a platform that provides key stakeholders in the U.S. export control process—all of whom are grappling with the consequences of recent U.S. export control measures—with a singular forum for joint deliberation. While these measures have certainly impacted China’s semiconductor industry, they may have had unintended consequences as well. For instance, American firms have managed to produce chips that comply with the new rules and supply them to China. Although these “compliant” chips are less powerful than the original version, they have nonetheless enabled China to train AI models.
As for U.S. allies, the restrictions on American companies do create an opening for international companies based in countries like Japan and the Netherlands to make sales to China. While this has been addressed by a “deal” that aligns the position of these countries with that of the United States, the larger possibility of cutting-edge semiconductor manufacturing equipment being available to China through foreign countries always remains.
Devising export control measures is never easy. It requires a high degree of technical proficiency, detailed information about the targeted entities, as well as a considerable amount of crystal gazing. Here, a consultative approach akin to that in the original COCOM, which had seventeen constituent countries, may be worth considering. A new version of COCOM could even provide for the concerned chip firms to participate as observers, giving them a common platform to voice their feedback before new rules are issued by the constituent countries.
Including countries that do not have the capability to produce semiconductor manufacturing equipment may also be worthwhile. This is because the October 2022 rules may have been circumvented by Chinese firms through the establishment of subsidiaries in other third-party countries such as Singapore, which saw a fivefold jump in sales made by certain leading American chip firms in the span of a year. Here, the United States is also working closely with India to ensure that targeted countries such as Russia cannot procure chips through other channels.
Lastly, COCOM 2.0 may also provide allied nations with visibility when it comes to the decisionmaking process, which would otherwise happen within the Bureau of Industry and Security in the U.S. Department of Commerce. It is highly likely that a multi-stakeholder process such as the one proposed may take time to arrive at major decisions, which would have consequences for supply chain resiliency. For instance, technology companies are usually given a few months to comply with and implement any export control measures. However, on the other hand, the firms that are in fact being targeted by such export control measures would likely stockpile supplies of the concerned technological items to sustain their operations. This could lead to a shortfall in supply for other global customers. Therefore, the process of designing COCOM 2.0 is not without its challenges.
A Common Platform
The COCOM was seen as having a significant effect when it came to enforcing a regime that denied the Soviet Union access to technology. To be sure, some would argue that implementing a similar arrangement in the case of China is a far-fetched possibility due to its deep integration into global value chains. However, compared to the current unilateral approach, COCOM 2.0 might still be a far more effective mechanism for providing U.S. allies, American industry, and other third-party nations with a common platform to discuss proposed U.S. export control measures.
The greatest beneficiary of this arrangement could be the United States itself, for which COCOM 2.0 could serve as a framework that deciphers the various concerns of different stakeholders. Doing so would make for an even more effective export control regime.