2019 Workshop on Strategic Trade Controls in the Asia-Pacific
6 November, 2019 - 8 November, 2019
The Pacific Forum and the Institute of International Relations at National Chengchi University, with support from Taiwan’s Ministry of Foreign Affairs, Prospect Foundation, and the US State Department’s Export Control and Related Border Security Program held their ninth annual strategic trade control workshop on Nov. 7-8, 2019 in Taipei, Taiwan. Over 50 participants from relevant government agencies and nongovernmental organizations attended in their private capacities. Discussions focused on intangible and emerging technology controls, the future of UN Security Council Resolution 1540, proliferation financing controls, developments in the Asia-Pacific region, the economic benefits of strategic trade control implementation, and coordinating assistance efforts. Key findings and recommendations include:
Countries are struggling to harmonize their controls on intangible technology transfer (ITT), and also find ITT controls difficult to enforce. Effective ITT management requires sector-specific outreach and engagement. Since technology is human-centric, people involved need to understand that certain technologies have dual-use implications. ITT controls, like all trade controls, should be proportionate, targeted, and based on risk. States are using catch-all controls to capture newer types of ITT such as additive manufacturing, but effective application of catch-all controls requires good intelligence and industry information.
Additive manufacturing, which can be categorized as a type of ITT, poses proliferation risks by providing an alternate supply chain for controlled items. The additive manufacturing supply chain is increasingly complex and has significant entrepreneurial activity. States should monitor additive manufacturing developments including startups and the flow of venture capital.
States agree that fundamental research should not be subject to export controls, but the boundaries between fundamental research, applied research, and proprietary research are sometimes unclear. Academia and industry can work with government to establish a threshold at which certain technologies need to be regulated.
Efforts to control “emerging technologies” have rekindled debate about the role of the multilateral export control regimes (MECRs). Some believe the regimes should be expanded into an international regime, while others think there should be fewer like-minded countries that agree on certain threats. An immediate step would be more transparency so non-members could be more aware of and involved in the technology classification process.
Technologies tend to develop quickly, which creates challenges for the classification processes of multilateral control regimes. But the regimes can move quickly if necessary. Technical dialogue among the four regimes on emerging technologies can help facilitate this process.
Recent trends related to proliferation financing are increasing legal obligations, an increase in the number of proliferation-financing related prosecutions (particularly in the United States), sanctions targeting cryptocurrencies, greater awareness and resources, and greater compliance awareness among financial institutions.
Strategic trade controls (STC) are being linked to investment controls, supply chain security, proliferation financing, and sanctions. While sharing information between STC and other domains can be a challenge, cooperation and information sharing among different government agencies and stakeholders, including industry, is critical.
Advanced countries are using export controls to manage the transfer of emerging technologies, protect their economic security, and for other foreign policy goals. This trajectory is likely to continue given the current geopolitical environment. There is a concern that the advanced countries’ approach to export controls could stymie the progress of developing countries in implementing STC. Southeast Asia may need to take a separate trajectory from the developed countries, focusing STC implementation on trade facilitation, WMD nonproliferation, and internal security concerns.
Opinions are mixed over the short- and long-term benefits of implementing an STC system. Several aspects of this issue require systematic investigation, including how much the presence of an STC system influences countries’ and companies’ decisions to invest in another country. A second topic is if and how STC enhances access to strategic technologies. A third area is the significance of a corporate Internal Compliance Program versus the presence of a national STC system. A fourth area is the perspective of small and medium enterprises (SMEs) versus big, multinational companies in terms of the perceived and actual costs and benefits of STC.
Participants acknowledged duplication of assistance efforts in the region, but duplication is not necessarily a bad thing as long as the information provided does not conflict. Officers in some countries rotate positions every couple of years, so there is a constant need for awareness-raising and training. Also, countries developing their STC systems can now “choose” from a variety of assistance providers, including from the United States, the EU, Japan or South Korea.
It is important that Taiwan stay engaged in STC developments, both so Taiwan can refine its own STC system and so it can teach other countries about how it developed its system and share strengths such as its Internal Compliance Programs.
Future meetings should investigate a range of topics, including whether it is possible to incorporate STC into trade deals or frameworks; import controls and extraterritorial application of STC; developments in China’s export control system; and how to get industry and academia more involved in outreach efforts.