Do Not Expect the U.S. to Relax Export Restrictions

Barack Obama plans to reform the U.S. export control system. On April 20th, U.S. Defense Secretary Robert Gates said the U.S. should establish a sub-level export control system, easing export restrictions. Experts said that if the formal establishment of this reform better serves the security and economic interests of the United States, then the current Sino-U.S. trade imbalance is expected to improve. But it remains to be seen how much the harsh restrictions of technology exportation to China can be relaxed. (April 23rd, “Economic Information Daily”)

The export restriction relaxation mentioned here mainly refers to the exportation of high-tech products. Some U.S. domestic observers may have high hopes of export controls being lessened, noting that if the United States were to relax export restrictions, bilateral exchanges and cooperation in the fields of science and technology, including space science, civil aviation and civil aviation technology, will be enhanced. In recent years, the United States has had a closed-off attitude toward high-tech cooperation, but this change could do both sides a good service.

In order to promote exports, Barack Obama is determined to change. The White House is currently conferring with dozens of officials from the United States Department of Defense Organization, Department of Commerce and State Department to build up a high-tech exports reform commission. The U.S. wants to expand exports because China is undoubtedly a huge market, but China’s import demand for high-tech products has to be taken into account. Exporting high-tech products to any country is hard because it is like opening a “forbidden area,” so the overall strategy of exportation of high-tech products to China must be controlled.

Analysts pointed out that although Obama is key to the reform of exportation, compared with previous expectations, the current reform road map to change U.S. exportation controls to China will be difficult. The current U.S. executive branch cannot change two restrictions on the export list; moving or modifying the list must go through all legal processes. Even if the executive branch can someday change the export restriction list, the U.S. export restrictions to China will be essentially unchanged.

The United States’ revelation of the relaxation of the restrictions on technology exports is the only good gesture of the Obama administration’s position, and the road to change or cancel America’s technology export restrictions to China could be very long. In 2009, the U.S. Congress passed the “International Relations Authorization Act.” This act provides the U.S. president with the access to satellites and related components from munitions export control list, setting aside their power. But the bill specified that these special powers are not applicable toward China and other “exceptional country” exports.

　　

It should be acknowledged that attempting to safeguard and consolidate one’s place in society, as in the case of America defending itself and avoiding China and other emerging power’s challenge, is human nature; such an attitude is understandable. The problem is that America’s approach of waiting to evaluate the situation before reacting will in this case theoretically put off many lofty goals, and aim at curbing the rise of emerging powers of export control policies.

In fact, the U.S. government is well aware of all the issues involving export controls to China. Export control is a double-edged sword because limiting the flow of high-tech products to China also means that domestic manufacturers have huge losses in sales. While other NATO parties have gradually relaxed high-tech product exports to China, the U.S. share of exports to China has decreased year after year. In 2001, 18.3 percent of China’s imported high-tech products came from the United States. In 2008, this figure dropped to 6.3 percent.

If the United States relaxes export restrictions to China, and maintains a similar figure of 18.3 percent of China’s import market, high-tech exports to China could bring in $600 million to the United States. Since China is already a major high-tech products export market, China’s telecommunication industry, computer industry and the semiconductor market have the potential to bring enormous business opportunities for U.S. companies. And in the next 15 years, companies could grow 20 to 40 percent.

In strengthening the technology export policy, the balance of economic interests and strategic interests must be taken into consideration. In comparing the control policy and the overall security strategy of the U.S. to China’s policies, it is not hard to find surprising consistencies. Export control itself is a part of both the U.S. national security and foreign policy strategy. After all, strengthening the exportation policy of technology to China will lead to the better implementation of a strategy to contain China.

In this sense, we do not expect the U.S. to relax controls on high-tech product exports to China. Now, even in the future to come, America’s view of China is becoming more vague: not a friend, not an enemy. The United States has not allowed China inside its circle, so high-tech export controls to China are certainly long-term. The CNOOC had this to say about their acquisition of Unocal: the Chinese just buy the oil, and the acquisition of oil fields mainly in Indonesia, not in the United States, it caused an uproar in the U.S. Congress. If the U.S. truly wants to move in the direction of exporting high-tech and cutting edge products to China, American politicians will not know how to succeed.