AI Diffusion Rule Threatens US Leadership, Warns ITIF

WASHINGTON—In response to the Biden administration’s Bureau of Industry and Security releasing an Interim Final Rule (IFR) establishing an “Export Control Framework for Artificial Intelligence (AI) Diffusion,” the Information Technology and Innovation Foundation (ITIF), the leading think tank for science and technology policy, released the following statement from Vice President Daniel Castro:

The Interim Final Rule (IFR) raises serious concerns about its potential impact on U.S. competitiveness, global AI leadership, and international alliances. By pressuring other nations to choose between the United States and China, the administration risks alienating key partners and inadvertently strengthening China’s position in the global AI ecosystem. Confronted with such an ultimatum, many countries may opt for the side offering them uninterrupted access to the AI technologies vital for their economic growth and digital futures—and currently, only one country is threatening to cut them off from these technologies.

Moreover, the IFR’s narrow focus on regulating closed-weight AI models, while leaving open-weight equivalents unaddressed, creates a glaring and counterproductive imbalance. U.S. companies developing proprietary AI models will face stringent regulatory burdens that foreign competitors can evade by leveraging open-source alternatives. This policy undercuts American firms in the global market and fails to meaningfully mitigate the risks the regulation purports to address. Instead of bolstering national security or safeguarding US technological leadership, the administration’s approach risks enabling rivals to accelerate their advancements and surpass the United States in this crucial domain.

The solution is not to further restrict access to AI chips or models but to reassess the current strategy. Future policies should prioritize enhancing U.S. competitiveness in AI by:

Expanding market access for U.S. chips and AI technologies to secure a dominant global market share for American firms.

Countering geostrategic competitors like China and Russia, which are actively forming alliances such as the BRICS AI Alliance to provide their partners with access to critical AI resources.

Focusing on the majority of lawful and beneficial AI applications, rather than disproportionately restricting their export.

Recognizing the economic implications of chip sourcing decisions, as every dollar spent on Chinese-made chips, instead of American chips, shifts revenue from U.S. R&D to China, diminishing the competitiveness of American companies.

The administration’s initial restrictions on chip exports were misguided, and the IFR compounds this misstep. Instead of correcting course, the administration persists with counterproductive policies that undermine U.S. leadership in AI while granting rivals a clearer path to dominance. The United States should be working to solidify its position as the global leader in AI by fostering innovation, strengthening alliances, and ensuring the broad availability of U.S. technology to legitimate users worldwide. A strategy rooted in competitiveness—not containment—will best serve America’s interests in the digital economy of the future.

Contact: Nicole Hinojosa, [email protected]