The Rant Continues

I have done two columns recently on export controls and thought that would be sufficient for a while, but I was wrong. It turns out nobody was paying attention. That is no surprise, but it is annoying nonetheless. So, when the Wall Street Journal published an article last week that repeated old canards and reignited an old debate, I felt I had no choice but to weigh in once again to set the record straight.

The essence of the article is that the Commerce Department’s Bureau of Industry and Security (BIS) is too lax in its licensing policy and allows too many exports to China. However:

• The cranky quotes were largely from former Trump administration officials and the data cited is from 2020, which means the things they are complaining about happened on their watch.


• The Trumpers usually blame career civil servants for these “mistakes,” but it was Trump personally who ordered that ZTE be removed from the Denied Persons List (in a tweet, no less), and it was Trump who ordered that licenses be granted to Huawei. If this was a problem, it began at the top, not on the fourth floor of the Commerce Department.


• Licensing data from 2021 shows a 197 percent increase in rejections from 2020, a sign that the Biden administration is taking its responsibility seriously. My previous columns discussed the expansion of export controls taking place under Biden. I have raised questions about that, but it is certainly evidence from the critics’ standpoint that the situation is getting better rather than worse.


• While that data shows a change from the last administration, it also misses the point. The Wall Street Journal article says that BIS’s license approval rate was 94 percent (acknowledging that it is now down to 88 percent) but fails to note that the rate has hovered at plus or minus 90 percent for at least 30 years. The reason is simple: companies don’t apply for licenses when they know they are going to be rejected. The result is that the data consistently has skewed in the direction of approvals.


• The article contains little information about what is actually being shipped via the licenses granted, and also does not note that a license is permission to export, but no guarantee the export actually occurs. This is significant in a case like Huawei. That company’s placement on the Entity List means that a license is required for any export to Huawei, whether it is a coffee mug or a semiconductor chip. That licenses have been approved for Huawei should be neither surprising nor disturbing.


• The comment about the small number of items controlled to China also misses the point. In the 1990s, I was an “early adapter” in giving the “higher fences around a smaller number of items” speech, subsequently given by officials in every administration since then. Over time, we have realized that if you try to control everything, you end up controlling nothing because enforcement becomes impossible. Better to focus the limited resources on what actually matters rather than stuff where the technology horse has long since left the barn. That is precisely what BIS has been doing.

What we are seeing once again is the demagoguery of ignorance. People don’t know how the export control system works or its limitations, and thus feel free to blame it for every technological advance China makes. So, one more time, let me explain what is really going on.

Starting more than 30 years ago as weapons became “smart” and information and communications technology (ICT) was integrated into warfighting, the government realized that an effective military would be dependent on the most advanced ICT, and obtaining it depended on cooperation from the private companies that invented and produced it. As a result, the key question became how to keep those companies profitable and growing so they could meet our defense needs.

That turned the export control issue on its head, because keeping our companies profitable means letting them export. Overcontrolling their exports starves them of the revenue they need to develop and produce the new products that keep us ahead of China. That doesn’t mean letting them do whatever they want; it means walking the fine line I have discussed previously between over- and under-controlling. The critics fundamentally don’t understand that and would prefer to embargo China—trying to starve them even if it means starving us as well—and misinterpret data to argue that BIS is somehow undermining our security.

In reality, BIS is taking the only approach that makes any sense—a case-by-case judgment of what can be safely exported and what cannot, coupled with an effort to multilateralize our controls so all high-tech producing countries are on the same page. We are damming the entire river, and not just half of it. Contrary to what the critics think, the United States is not the sole producer of advanced ICT, and it is not the leader in all categories. Acting unilaterally not only fails to achieve our strategic goals; it is an economic and technological gift to our competitors.

Sadly, this debate has been going on for more than 40 years, and this column is not going to end it because demagoguery is easier than debating actual facts. The Wall Street Journal article was a disappointment—its editors should know better. All I can promise in response is to continue to rant and hope eventually someone pays attention.

William Reinsch holds the Scholl Chair in International Business at the Center for Strategic and International Studies in Washington, D.C. 

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