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1 1 (March 24, 2022)

handle is hein.crs/govehdn0001 and id is 1 raw text is: Con r sWan I infon ing I L I s arch Se >1914 Updated March 24, 2022 U.S. Export Controls and China Since 2018, Congress and the executive branch have revised-through legislation, regulation, and licensing practices-the U.S. export control system that regulates dual-use exports (goods and technology that may have both civilian and military uses). Much of the legislative reform has focused on controlling emerging and foundational technologies, strengthening other technology controls and licensing practices, engaging multilaterally to ensure U.S. controls are effective, and considering the impact of controls on the U.S. economy, including the foreign availability of U.S. products subject to control. Many of these changes were efforts to address concerns about the People's Republic of China's (PRC or China) pursuit of civilian and military leadership in advanced technologies through U.S. commercial ties. Congress plays a key role in overseeing the reforms it enacted and shaping the U.S. export control regime to address U.S. national security and foreign policy concerns, including those posed by China. China's Industrial Policies China's state-led industrial policies, such as Made in China 2025 (MIC 2025), seek to create competitive advantages for China in strategic industries, in part by obtaining technology from U.S. and foreign firms. MIC 2025 aims to establish China's leadership in emerging technologies critical to future commercial, government, and military capabilities. Priority areas include advanced manufacturing, aerospace, artificial intelligence, information technology, new materials, robotics, and semiconductors. China's military-civil fusion (MCF) program also seeks to leverage MIC 2025 technological advancements for military development. Some experts say that China's approach blurs commercial and military distinctions and may challenge the U.S. export control regime's ability to distinguish between military and civilian end use and end users. China's policies in strategic sectors often require a PRC partner, frequently state-tied, to own or otherwise control U.S. technology that is transferred to China, potentially increasing risks that U.S. technology could support China's military. U.S. Dual-Use Export Controls The Export Control Reform Act of 2018 (ECRA) (P.L. 115- 232) reestablished nonemergency authority for the President to control dual-use exports for national security and foreign policy reasons and to coordinate with multilateral export control regimes, and provided policy requirements for setting controls. The Bureau of Industry and Security (BIS) of the Department of Commerce administers dual-use export controls and chairs an interagency process that includes the Departments of Defense (DOD), State, and Energy. BIS administers these controls through the Export Administration Regulations (EAR, 15 C.F.R. 730 et seq.), which includes the Commerce Control List (CCL) of dual-use technologies subject to controls. The EAR sets licensing policy for specific destinations, end use, and end user controls. On the CCL, national security (NS) controlled items are on the Wassenaar Arrangement's multilateral control list. The EAR presumes denial for license applications of NS items that would make a direct and significant contribution to China's military. Separate statutes and regulations control nuclear materials and technology and defense articles and services. U.S. law has prohibited arms sales to China since 1989. Congress has also mandated a policy of denial for exports of satellite and space equipment to China. Figure I. 2020 U.S. Exports to China and BIS Actions EAR 99 Commerce Control List 18.1% (Not controlled) Reqre 1.4f x p;ons 0.4% 5 Licensed O.4% Other USG and ITAR 0.3% Source: CRS with reporting data from BIS. Note: EAR99 items are subject to the EAR, but are not controlled. Percentages are based on the value of U.S. exports. US. Licensing Ap proach The U.S. government only controls or restricts a small percentage of U.S. technology exports to China in practice. BIS has removed from the CCL or waived licensing requirements for much of U.S. technology trade to China since the 1990s as certain technologies have become more widely available globally and in response to U.S. business interests in the China market. Before new rules in May 2020, BIS waived license requirements for NS items destined for civilian end use in China in sectors such as aerospace, computing, and semiconductors. An estimated 18.1% of $124.6 billion in U.S. exports to China in 2020 ($22.6 billion) involved dual-use technologies on the CCL and subject to controls. BIS required licenses for 2.1%, or $478 million of these CCL technology exports. Most CCL technology exports-97.9% or $22.1 billion-went to China without a license. (Figure 1). Separately, BIS reported that it reviewed $112 billion in licenses for U.S. software and technology exports to China in 2020 and denied 2.2% ($471 million). The $112 billion in licenses in 2020 increased from $6.9 billion in 2019; the increase might reflect licenses, including for EAR 99 items, required for PRC firms added to the EL since 2019. EAR 99 includes nonsensitive products and potentially sensitive technologies in light of China's dual-use programs. ECRA called for a review of the CCL and EAR99 to determine whether some EAR99 technologies should be added to the CCL. In 2020, BIS denied three of 482 licenses to release U.S.-controlled technology and knowhow to PRC nationals.

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