The Wall Street Journal reports that the White House is cooking up new export controls on China. The idea is to restrict exports to China of technologies that could assist in China’s Made in China 2025 manufacturing upgrade initiative. That initiative focuses on 10 priority industries, which include new advanced information technology; automated machine tools and robotics; aerospace and aeronautical equipment; maritime equipment and high-tech shipping; modern rail transport equipment; new-energy vehicles and equipment; power equipment; agricultural equipment; new materials; and biopharma and advanced medical products.
Some of these items and technology might on the Commerce Control List and may already be controlled for export to China. Others clearly are not. Politico reports that the National Security Council is drawing up a list of technologies to be controlled for export to China targeting the priority sectors for Made in China 2025. It is not clear whether “technology” here includes the common usage which would cover goods or only the more technical use of that term by BIS which covers information only. The NSC List is scheduled to be released on Friday, so we should know more then.
How this new list will play out in relation to foreign availability determinations under Part 768 of the EAR is also anyone’s guess. Certainly technologies in many of the targeted sectors will remain available to China from other foreign countries, none of which can reasonably be expected to adopt these controls.
Another issue, not to suppose that the White House cares about complying with the General Agreement on Tariffs and Trade (“GATT”), is the extent to which these new export restrictions comply with the prohibition on quantitative export restrictions in Article XI of GATT. Certainly, these restrictions will not fit within the stated exceptions to the prohibitions on such restrictions in Article XI — namely, protection of domestic supply of “foodstuffs or other products essential to” the exporting country. Nor do they have any relation to “classification, grading or marketing of commodities in international trade.”
Instead, the restrictions can only be justified on the basis of Article XXI’s national security exception which provides the basis in GATT for most export control regimes. The national security exception in Article XII is related to “fissionable materials,” “traffic in arms,” or “war or other emergency in international relations.” Obviously the reference to war in Article XII is not a reference to a trade war, so it seems unlikely that the new export restrictions could survive a WTO challenge.