The proposed MATCH Act is an ambitious effort to expand technology transfer controls and protect American security. It calls for a new multilateral approach to export controls on semiconductors.
The Wassenaar Arrangement, a voluntary export controls regime established after the end of the Cold War, offers a few suggestions for the MATCH Act. Wassenaar was created in a different international security environment that incentivized cooperation under US leadership.
The Arrangement was the merger of two Bush administration initiatives: a G-7 effort to control dual-use goods related to terrorism and a P-5 effort to limit conventional arms transfers. It replaced the “Coordinating Committee,” a NATO body created to deny technology transfers to the Soviet Union and Warsaw Pact. Both the Bush and Clinton Administrations worked to lead a transformation of this Cold War entity into a new global regime for technology and conventional arms transfers.
More than that, Wassenaar was part of a broader US effort after the Cold War to work with allies to incorporate the former USSR and Warsaw Pact countries into a cooperative international order. At the core of this was a set of negotiations with Russia on the global role it would play. Thirty years ago, Russia was much more amenable to agreement, and while suspicious of the West, were at least willing to try to work together to build a stable global order. Equally important, China was still a small enough producer that its membership could be dismissed. Neither is still true.
The MATCH Act needs allies — particularly the Netherlands, Germany, and Japan — that have a shared view of security problems, not just on chips. But the primary security problem for Europe today is Russia, not China. European nations have underinvested in defense for decades and are now threatened by an aggressive Russia. The US, for whatever reason, appears accommodating to Putin’s Russia in a way that raises reasonable suspicions in Europe.
Wassenaar was built on the NATO alliance (with Japan and Australia). Having spent the last year trashing NATO, it will be difficult for the US to go back to its members and say, “You don’t spend enough on defense, you’re weak, we may leave. By the way, could you help us with China?”
It’s a very different negotiating landscape than it was 30 years ago. The relative decline of Europe’s major powers and the expansion of the European Union’s role — which has made Brussels as important as national capitals when it comes to tech regulation — creates the need for more diplomacy, not less.
A case can be made that it is in Europe’s interest to go along, but diplomacy is not a strength for this Administration, nor is partnership with NATO. Europeans might be amenable to controlling technology transfers to China, but they don’t need the United States to do so. The EU recognizes that China’s export policies are predatory and could destroy European industries. This means that European nations should be an easy source of support, but given the record of the last year, that may not be possible.
European countries will not be amenable to being threatened or intimidated about this. Europe is suspicious of China, but it is currently also suspicious of the US. Saying “cooperate with us in technology transfer in China or the US will impose tariffs or threaten to withdraw from NATO again” is not persuasive. The MATCH Act recognizes this by allowing the US to impose unilateral control if there is no multilateral agreement in 150 days (note that the Wassenaar Arrangement took almost three years to negotiate). From a negotiating perspective, the MATCH Act is already starting at a severe disadvantage.
Besides facing steep obstacles to multilateral cooperation, the Act itself is based on assumptions that do not hold up under scrutiny. The first of these is that semiconductors are a chokepoint in US-China tech competition. Semiconductors are an essential industry, but it is a globally distributed industry. The US leads, but it is not the only country that can make chips. Without cooperation from allies in Europe and Asia, slowing China down will be difficult.
China already has a large share of the semiconductor market, not at the leading edge, but if we say China can only make chips that are a decade or so behind the curve, that is still enough to make modern weapons. China has been handicapped in building modern weapons not by a lack of chips but by its own internal problems, chiefly corruption.
Chips and AI are not magical technologies that will confer military advantage and economic strength. Iran did not need advanced chips to block the Strait of Hormuz, Russia did not need advanced chips to invade Ukraine, and China does not need advanced chips to invade Taiwan.
Even if the US completely banned the export of chips to China, even if it returned to Europe on bended knee and promised it would cooperate on Russia if Europe cooperated on exports of chipmaking equipment, this would not alter the trajectory of competition with China. We are in a contest. It will take more than this piece of legislation to stay ahead.
James Lewis is a Distinguished Fellow at CEPA’s Tech Policy program.
Bandwidth is CEPA’s online journal dedicated to advancing transatlantic cooperation on tech policy. All opinions expressed on Bandwidth are those of the author alone and may not represent those of the institutions they represent or the Center for European Policy Analysis. CEPA maintains a strict intellectual independence policy across all its projects and publications.
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