Efforts by the U.S. government to prevent Russia and China from using American equipment to strengthen their defense sectors have resulted in tough rules, but enforcement has been leaky. As a result, U.S.-made tools continue to appear in Russian missile factories and in Huawei’s supply chain. That’s not enough, as wars in Europe and China threaten neighboring countries.
The United States and its allies produce cutting-edge tools for both precision metal processing and semiconductor manufacturing. At a time of heightened international tensions, the United States and its allies were right to seek to prohibit adversaries from using these tools to produce weapons that would undermine America’s military advantage. In October 2022, the U.S. announced a new technology at the 14-nanometer level targeting chips needed to build supercomputers and train frontier artificial intelligence models, with the aim of restricting China’s access to the chip technology used. It imposed restrictions on U.S. companies that sell and service equipment to manufacture the following chips: To train AI systems for military use. Then, after Russia invaded Ukraine in 2022, the United States and its allies stepped up sales of cutting-edge machine tools to Russia to prevent their use for military purposes.
But strict paper regulations haven’t stopped Russian and Chinese factories from sourcing American machinery. Industry analysts believe Chinese chipmakers have been successful in repurposing imported equipment to make more advanced chips. A large number of Western and Japanese metal-working machines have been discovered at a Russian defense factory that produces large quantities of weapons to be used against Ukrainian cities.
Companies are mindful that their tools could be legally sold to one customer and then resold to defense manufacturers in Russia or China without their knowledge. They claim that once the machine is in the hands of the customer, they have no control over how it is used.
Now, the Commerce Department is trying to tighten export controls by knocking on companies’ doors to see if they’re violating the rules. However, under a 2004 agreement signed by the United States and China, only two U.S. export control officials are allowed to work in China. Her two officers make an average of 55 site visits per year and verify approximately 1% of all licenses. Even in facilities that companies actually visit, there is often a period of 100 days or more between the time a request is made and access is granted, giving companies plenty of time for obfuscation. given. Most of the United States’ allies have even less effective verification regimes, which is why a disproportionate share of restricted equipment reaching Russia today is diverted through them.
Even if America is a corporate fox, you can’t expect it to protect the chicken coop. Some Western companies may not want to know too much about their customers to avoid making it difficult for them to turn a blind eye. Additionally, companies face commercial incentives to guarantee the confidentiality of customer data. Therefore, self-regulation failed.
So how can Western countries strengthen enforcement of these rules? Companies that create controlled tools will be required to install tamper-proof geolocation on their tools. Should. Apple AirTag costs less than $30. Manufacturers of multi-million dollar tools can now reliably find cost-effective ways to incorporate government-approved geolocation information into their dual-use devices and provide real-time verification to the Department of Commerce. Sho. Ideally, if a banned tool is transferred to a Russian or banned Chinese factory, it would be automatically disabled. At least investigators will have a track record of where the tools were.
Geolocation is just the beginning. The most complex manufacturing tools rely on software as much as precision drill bits. The metalworking tools used to make airplanes and artillery are equipped with complex computer control systems. It is technically possible to know not only where a tool is located, but also what it is used for.
The United States needs major manufacturing allies like Japan and Germany to present a united front. After all, Japanese-made tools have also been seen in news reports inside China’s nuclear research facilities. The Biden administration should work with key allies in Europe and Asia to internationalize these stricter regulations.
Placing more demands on companies is not unprecedented. The Treasury Department has fined banks billions of dollars for facilitating money transfers to terrorist organizations and drug cartels. Banks facing large fines invested in good compliance practices. Some banks currently do not allow the use of VPNs on their websites as a first line of defense, allowing them to geolocate requests and prevent transactions in sanctioned countries. It’s not a huge leap to require Western tool manufacturers to implement similar controls.
During the Cold War, Western countries imposed extensive regulations to prevent metalworking tools from being used for Soviet military purposes. Today, taking machinery export controls seriously is one of the most cost-effective ways to meaningfully limit enemy forces. We need to revitalize these technologies as we face a revivalist Russia and a hostile China. Otherwise, our tools will continue to be used to build their armies.
Chris Miller is the author of Chip War, an associate professor at the Fletcher School at Tufts University, and a non-resident senior fellow at the American Enterprise Institute. Jordan Schneider is the founder of China Talk, a podcast and newsletter about technology policy and U.S.-China relations.
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