DP14739 Export Controls: America's Other National Security Threat

Author(s): Chad P. Bown
Publication Date: May 2020
Date Revised: May 2020
Keyword(s): dual-use technologies, ECRA, export controls, National Security, uncertainty, Wassenaar Arrangement
JEL(s): F13
Programme Areas: International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=14739

The Trump administration's allegations that some imports are a threat to America's national security have received wide publicity during 2017-20. But the administration was undertaking a more quiet US policy shift on the export side in the same time frame. Addressing the national security threat presented by exports posed different economic and institutional challenges from those associated with import policy, including the acknowledgment that export controls for legitimate national security reasons can be the first-best policy to confront the problem at its source. Yet, export controls could also be misused as a beggar-thy-neighbor policy to redistribute economic well-being across countries, even from one ally to another. This paper describes how US export control policy evolved over 2017-20, as well as the international institutions - first the Coordinating Committee for Multilateral Export Controls (COCOM), then the Wassenaar Arrangement -historically tasked with multilateralizing US export restrictions used to protect national security. With the potential for US export control policy to brush up more frequently against WTO rules designed to limit the use of export restrictions, the paper also highlights new challenges for the WTO's system of resolving trade disputes. Overall, a US failure to strike the right balance for its export control policy would result in it being ineffective at addressing national security risks, costly for the economy, and problematic for trade and diplomatic relations.