Foreign investments in U.S. technologies are essential for a thriving economy.
But those investments can also pose national security risks as commercial technology in areas such as artificial intelligence and robotics serves as inspiration for government and military systems.
According to experts who spoke before the House Foreign Affairs Committee March 14, 2018, these two competing factors create a fine line for government export control and foreign investment regulations to balance U.S. economic prosperity and national security.
Alan Larson — senior international policy adviser at Covington and Burling LLP and former undersecretary for economic, business and agricultural affairs at the Department of State — said that China is an example of how the last decade has changed national security and economic considerations.
“Naturally China and the United States each have a strong economic interest in developing and maintaining leadership positions in critical emerging technologies, including artificial intelligence, semiconductors and robotics,” said Larson. “At the same time, China has become a potential strategic competitor of the United States. Scholars examining the sweep of history are now debating whether the ‘rise of China’ can occur peacefully and in a manner that is consistent with the security interests of the United States.”
According to Larson and other witnesses, the current export controls and foreign investment legislation, such as the Committee on Foreign Investment in the United States, or CFIUS, were developed during the Cold War and present an outdated framework for addressing foreign investments.
Mario Mancuso — partner at Kirkland and Ellis LLP and former undersecretary for industry and security at the Department of Commerce — said that a globalized economy has rendered the core assumptions behind such controls “outdated in many areas,” such as emerging technologies.
“On the other hand, while globalization has diminished our lead in certain technology areas, it has also been central to our economic and, by extension, our national security success,” Mancuso added. “One need only look at U.S. overmatch advantages in nuclear and electronics-enabled capabilities at critical junctures in our history to see how economic scale and technological superiority worked hand in hand in service of our global preeminence.
The Export Control Reform Act of 2018, introduced in the House this past February, aims to modernize U.S. authorities by authorizing the president “to control the export, reexport and transfer of commodities, software and technology to protect the national security, and to promote the foreign policy of the United States.”
The bill would place specific focus on “dual-use items,” which have both a legitimate commercial use and potentially nefarious national security use, according to committee chairman and bill sponsor Rep. Ed Royce, R-Calif.
However, witnesses were quick to clarify that while export controls do address clear issues of national security, they are not good vehicles for dealing with intellectual property theft or countries seeking to invest in U.S. companies for economic advantage. Those must instead be addressed by trade policy and negotiations with foreign leaders.