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The EU must urgently formulate its own position on the transfer of sensitive technologies to China.

After a year in which the United States heaped pressure on European countries to ban Chinese telecommunications group Huawei from their 5G networks, the gradual rollout of US export controls on emerging technologies is likely to create new strains in the transatlantic relationship over how to handle China. On January 3, Washington began unveiling new export control proposals aimed at restricting China’s access to sensitive technologies — from artificial intelligence and quantum computing, to 3-D printing and semiconductor manufacturing equipment. The US is asking allies in Europe and elsewhere to follow its lead and there is a risk that it could employ secondary sanctions to raise the pressure if they fail to do so.

In light of this situation, European governments must urgently formulate their own approach to technology transfers. If they fail to do so, Europe risks being thrown onto the defensive by Washington. There is also a risk that the US push to curb technology exports aggravates divisions between member states and undermines the European Commission as an actor on trade. Over the past years, EU states have given the Commission a formal mandate to explore 5G security risks and develop an investment screening mechanism. It is high time to take a similar approach on emerging technologies, writes Noah Barkin, former visiting academic fellow at MERICS and author of the MERICS China Monitor “Export Controls and the US-China Tech War — Policy challenges for Europe”, published today.

Based on numerous discussions with high-ranking representatives of the US government, European institutions and member states, Barkin argues that advanced technology-producing states in the EU that are directly affected by US controls must coordinate their actions better, explore new structures that respond to challenges at the nexus of trade, technology and security, and ramp up engagement with allies in Asia, which are facing the same pressure. Bringing experts from academia and business into the discussion is also urgent.

The author urges member states to swiftly resolve a three-and-a-half-year stalemate over reforming the EU’s own dual-use export control regime and pivot to emerging technology challenges, pushing this up the political priority list during the German presidency of the EU in the second half of 2020. Mounting policy challenges related to the COVID-19 pandemic are likely to distract from this effort. European concerns that US export controls are part of a push to contain China’s technological rise could also dissuade European capitals from tackling this in a proactive fashion. But developing a coherent, joined-up approach to emerging technologies is the best way for Europe to assert its own sovereignty and deliver on its promise to become more of a geopolitical player, instead of a powerless pawn in the US-China competition.

Washington is demanding support for its technology curbs in bilateral talks and in multilateral export control regimes like the Wassenaar Arrangement. The author warns that the Americans could soon lose patience in building what they call "coalitions of caution" towards China. European companies could then be threatened with secondary sanctions. He gives the example of the Dutch company ASML, which has been unable to deliver its most advanced semiconductor manufacturing machine to a Chinese client amid an intense pressure campaign from Washington aimed at the Dutch government.

You can find the complete study “Export controls and the US-China Tech War. Policy Challenges for Europe” here.

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