[Speaking Out] Export Controls: Preoccupation with China's Response is Unhelpful

I received many inquiries on my suggestion in this column on February 6 that Japan should identify China as the target of semiconductor export restrictions being planned under international cooperation. I here would like to supplement my argument, considering that many people may be unfamiliar with export controls. 

Reluctant to provoke Beijing, the Japanese government may be making arrangements to avoid singling out China as the target of the restrictions. The government may use the existing Wassenaar Arrangement framework to add semiconductors to the list of products for export restrictions under the Foreign Exchange and Foreign Trade Act (FEFTA). Forty-two countries participate in the Wassenaar Arrangement to prevent the excessive accumulation of conventional weapons. It applies to all regions in the world. 

Tokyo is likely to explain that the semiconductor export restrictions will nominally apply to all regions while effectively they apply only to China. The purpose of this would be to avoid explicitly mentioning China. The explanation, though seemingly plausible, has two problems. 

The Purpose of Export Controls

Restrictions on exports to all regions deviate from the purpose of restrictions. Firstly, it has been considered that export restrictions under the FEFTA should be the minimum necessary and based on international agreements. This was confirmed by the Japanese government when I took charge of the Wassenaar Arrangement introduction at the then Ministry of International Trade and Industry in the mid-1990s. 

The semiconductor export restrictions in question are based on an agreement between Japan, the United States, and the Netherlands. The US would restrict such exports to China alone. If Japan subjects all regions to the restrictions, they would apply to regions not subject to the US restrictions. For instance, Taiwan and South Korea. Such restrictions would be imposed by Japan alone. 

Japanese export restrictions on their own run counter to the spirit of the abovementioned FEFTA. The government may claim that a blanket approval for exports to other countries would effectively restrict China-bound exports only while nominally restricting exports to all destinations. The claim represents the practical outcome of the restrictions, but legally speaking, they still apply to all export destinations.

Some argue that export restrictions should cover all destinations to prevent circumvention. But this argument misinterprets the system of the FEFTA. The act is used to restrict exports to specific destinations. A separate administrative action will be required to prevent circumvention, as was the case with the Coordinating Committee for Multilateral Export Controls (CoCom).

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An Unnecessary Burden on Japanese Companies  

Secondly, Japanese companies alone would be required to restrict exports to all destinations while US companies would only need to restrict exports to China. The Japanese government may explain that a blanket approval system would be used to ease the burden on Japanese companies. But this is just an attempt to evade the problem. Even simple procedures will impose unnecessary burdens on companies.

The semiconductor export restrictions may only affect several companies in Japan. But the US is considering expanding the scope of restrictions on China-bound exports. If it does, they would cover quantum, biological, and other emerging technologies. Export restrictions cannot be treated as a stopgap measure. 

Basically, the government must clarify the purpose of export restrictions to the people and keep them to the minimum necessary. It should also not be preoccupied with avoiding China's reaction to the extent of ignoring the aforementioned two points. The government should not take the easy way out with any ad hoc approach but hold fast to export control principles. 

(A version of this article was first published by the Japan Institute for National Fundamentals, Speaking Out #1010 on February 14, 2023.)

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Author: Masahiko Hosokawa

Masahiko Hosokawa is a professor at Meisei University. He is a former director general of the Trade Control Department at Japan's Ministry of Economy, Trade and Industry. He is also a Planning Committee member at the Japan Institute for National Fundamentals.