U.S. finalizing rules to limit sensitive tech exports to China

The U.S. is finalizing its regulations to restrict exports of sophisticated technology to China.

The five rules cover products like quantum computing and 3-D printing technology that the 2018 law mandated to keep sensitive technologies out of hands of rival powers.

Before drafting the rules, Commerce sought industry comments last year on a raft of high-tech sectors that it could cover under the law, from artificial intelligence technology to robotics.

That fueled concerns among U.S. businesses the department would craft broad, strict regulations that would stymy a host of exports to key customers.

But the internal status update shows for the first time that Commerce is finishing the first batch of rules that touch on just a few technologies that they’ll propose to international bodies before taking effect, a reprieve for U.S. companies.

“Based on their titles, the rules appear to be narrowly tailored to address specific national security issues. It should go a long way to calming the nerves of those in the industry concerned that the administration would impose controls over broad categories of widely available technologies,” said Kevin Wolf.

Kevin Wolf is the former assistant secretary of the Commerce Department for export administration.  

Commerce declined to confirm any details but said it has several proposed rules in the review process.

Commerce Department to issue more rules in the future

Despite the apparent reprieve, Commerce could issue more rules in the future, regulating sales abroad of cutting-edge items. 

The document failed to outline when the rule proposals would be made public or what the controls would look like for specific countries, buyers, and uses.

In a move that should appeal to U.S. firms, Commerce will submit the rules to international bodies for approval so that they may be implemented overseas, not just by the United States. 

It would establish a level playing field for U.S. companies abroad, but would also take much longer to review and go into effect, likely until mid-2021 at the earliest.

Commerce will seek industry comment on the rules before submitting them to the groups. A sixth rule covering artificial intelligence will go into effect in the U.S. without an explanation.

The revelations come amid growing frustration from Republican and Democratic lawmakers over the slow pace of the rule roll-out, with Senate minority leader Chuck Schumer urging the Commerce Department to speed up the process.

Republican Senator Tom Cotton said he was “disappointed at the lack of political will” at the Commerce Department, accusing it of a “troubling” lack of urgency.

“While bureaucrats and industry shills twiddle their thumbs, the Chinese Communist Party continues to purchase sensitive U.S. technologies with clear military applications,” he said. 

“I will be digging deep into the Commerce Department’s actions.“

“China firmly opposes the U.S. abuse of the concept of national security and export control measures to impair normal cooperation between businesses and countries,” 

Chinese foreign ministry spokesman Geng Shuang said at a regular briefing in Beijing on Wednesday when asked about the rules.

Limiting tech exports will not disrupt China’s innovation or development, said Geng.

According to the status update, the agency plans to regulate exports of quantum diluted refrigerators, which are used to keep qubits cold in some quantum machines. Qubits are used in quantum computers to perform calculations that would take conventional computers for thousands of years.

Major makers of the refrigeration devices include U.K.-based ICE Oxford, Finland-based Bluefors, and U.S.-based Janis Research.

The rules would apply to exports of goods from the U.S. as well as shipments of items made abroad that contain a significant amount of U.S. technology or components.

That rule was sent to the Commerce Department’s Office of Policy and Strategic Planning on Nov. 19, along with another law regulating 3-D printing for explosives, the document shows.

Another regulation on exports of the so-called “Gate-All-Around Field Effect transistor technology used to manufacture semiconductors, was awaiting comments from other agencies on Dec. 5.

The transistors are expected to play a major role in newer, faster semiconductors that are under development by Taiwan Semiconductor Manufacturing Co, Samsung Electronics Co Ltd, and Intel Corp.

Two other rules would regulate chemicals used to make Russian nerve agent Novichok and single-use chambers for chemical reactions.