Extending Export Controls to Emerging Technologies Could Cost U.S. Businesses Up To $56.3 Billion, New Report Finds

May 20, 2019

WASHINGTON—As the U.S. Commerce Department considers extending export controls to a broader list of emerging technologies, a new report from the Information Technology and Innovation Foundation (ITIF), the world’s leading think tank for science and technology policy, finds that defining an overly restrictive set of technologies for export controls could cost U.S. firms between $14.1 to $56.3 billion in export sales over five years, with missed export opportunities threatening between 18,000 and 74,000 jobs.

“The administration should use extreme caution in identifying emerging or foundational technologies as candidates for export controls,” said ITIF Vice President Stephen Ezell, lead author of the report. “Advanced technologies increasingly shape competitive advantage for nations around the world, including the United States. Limiting U.S. exports would hold back American firms in the race for global innovation advantage by constraining their output, exports, and employment growth.”

The Export Control Reform Act, signed into law in August 2018, requires the Commerce Department’s Bureau of Industry and Security (BIS) to impose export controls on emerging and foundational technologies that are essential to U.S. national security. However, Congress left BIS to define what constitutes as either emerging or foundational technologies. BIS is now considering a list of emerging technologies in fields ranging from biotechnology to artificial intelligence and robotics.

ITIF’s report analyzes the potential nationwide economic impact of expanded export controls under three scenarios in which exports from affected industries drop by 5, 10, or 20 percent.

The report finds the 10 states that would experience the greatest losses due to extending export controls to an expanded set of emerging technologies would be California, Texas, Washington, Florida, Massachusetts, New York, Kentucky, Illinois, Georgia, and Indiana.

The report recommends several policy principles to guide the administration’s development of an export control regime for emerging and foundational technologies:

  • Regularly update export controls to reflect the global state of play in advanced-technology industries, such that controls do not preclude U.S. enterprises’ ability to sell high-tech goods and services that are on a technical par with commercially available goods and services from foreign competitors;
  • Limit the scope of controls for emerging products to those that provide a specific, identifiable, and qualitative military advantage;
  • Recognize that existing export control regimes already adequately protect many of the technologies identified;
  • Avoid export controls on established technologies;
  • Apply existing license exceptions pertinent to any emerging technologies designated for control;
  • Continue to coordinate export controls internationally, recognizing a multilateral approach as preferable; and
  • Adopt a comprehensive strategy to ensure the United States remains the world’s leader in developing key advanced technologies.

“Imposing export controls harms U.S. firms by reducing their sales and thus their ability to reinvest profits in the R&D that enables them to continue to innovate and create high-paying jobs,” said ITIF Research Assistant Caleb Foote, co-author of the report. “The U.S. export control regime should be established to protect U.S. national security interests without putting U.S. competitiveness in emerging technologies at risk.”

Read the report.