Reasons And Risks Of Export Barriers In The Field Of AI and Other Advanced Information Technologies Presented by: Dr. Székely Date: 31 July 2024 Outline Of The Presentation - 1. A short overview of export barriers as economic, and (geo) political tools. - 2. Export barriers and the advanced digital technologies subject to export restrictions. The current state of play. - 3. Problems posed by export restrictions. - 4. Conclusions and proposed solutions for a fair and effective export restriction regime. A Short Overview Of Export Barriers As Economic, And (Geo)Political Tools - Export barriers to sensitive technologies are known since Antiquity. Their purpose is most often to maintain economic and military advantage. - Regulation has significantly broadened in the 20th century (Aubin and Idiart, 2016), and again recently to include dual-use items (knowledge, goods, technology, and software) and even single (civilian) use items. - Complex lists of items and entities (such as sanctions lists and embargoes) as well as catch-all rules are used to effectuate such restrictions. - The criteria kept in view for such restrictions are classification, destination, the enduser, and the end-use of items. - National (constitutional human rights provisions, 'Magnitsky laws') and international instruments govern these restrictions (laws of armed conflict, as neutrality law and weapons law, arms control law, intl.' UN sanctions law). Main rules are national. - There is an inherent tension between the principle of free trade and such measures (authorized as exceptions, mainly on grounds of defense/intl.' law of armed conflicts e.g. Art. XXI(b)(ii) of GATT 1994, Art. 346(1)(b) of TFEU etc.) (Voetelink, 2022). - The meaning of 'export' in legal instruments is much broader than it seems: it contains not just physical items leaving the exporting country (even temporarily), but may also include items communicated from, or by a national of the 'exporting country' to a foreign destination (use-case: online repositories accessed from abroad). In-country 'exports' ('deemed exports') such as communicating controlled (but not classified) information to a foreigner may also be regulated by such restrictions (Aubin and Idiart, 2016). - Non-compliance with such regimes may carry stiff fines, criminal penalties, and loss of business, while application is sometimes also extraterritorial (Aubin and Idiart, 2016). - Such regimes increase the costs of exports, and present other pitfalls with a chilling effect on technology transfers, in all industries, including the defense sector. Export Barriers And The Advanced Digital Technologies Subject To Export Restrictions. The Current State Of Play - AI is the principal advanced digital technology that is subject to current restriction regimes (Brockmann, 2022). Another technology with transformative potential is quantum computing (QIT) (Perrier, 2022). - Measures for the export control of AI and quantum technologies are already in place: • US Bureau of Industry and Security (BIS) lists (both classification and enduser), updated for AI in 2022 and for QIT as recently as May 2024. • Australia (Foreign Investment Review Board Guidance Note 8 National Security, 2021 mainly classification). - • China's Export Control Law (as updated in February 2024). • EUDUR (mainly categories 3, 4 and 6 electronics, computers, sensors). What is, and what ought to be subject to restriction? Main objects of export controls are advanced semiconductors, and manufacturing equipment, quantum computing and related sensor and containment equipment. Problems Posed By Export Restrictions - Technological decoupling vis-à-vis China may thwart international technological cooperation (van der Linden and Łasak, 2023). - Extraterritorial application (e.g. chip-manufacturing equipment export). - Foreign direct product rules (e.g. prohibiting export by third party manufacturers using US-made equipment) posing compliance risks to European suppliers. - Complex, multi-actor regulatory mechanisms. - Complex, and as of yet untested technologies. - Added friction and costs in commerce. - Lack of transparency on all levels of the process. - Lack of clear and impartial jurisdiction as state and private parties both involved in export control enforcement. - Some actors (specifically China) may aim to develop national technological alternatives to imported technologies. Conclusions And Proposed Solutions For A Fair And Effective Export Restriction Regime - Export restrictions on potentially disruptive information technologies slow down global technological development and invite countermeasures thereby setting the stage for a new Cold War. - Export restriction regimes are needlessly complex and remain in the hands of national regulators. - A wider economic decoupling may result, and with the lower degree of economic interdependency may come a higher risk of conflict. - No international regulatory and adjudicational framework exists. - Ways of mitigating (some) issues: • Ways of mitigating (some) issues: • The "small yard high fence" approach (Weiss, 2022). • Concentrating on specific software and advanced hardware (Flynn, 2020). • A possible Democratic Technology Alliance (Jain, 2022). • Common international standards (for exportable AI) (Jones, 2023). • Subjecting technology export rules to the GATT/WTO or a similar process.