President Trump tweeted his support for sales of U.S. goods and technology to China on Tuesday amid a growing debate about possible federal regulations to further restrict exports to that country.
“We want to sell product and goods to China and other countries,” he said in a string of tweets. “We don’t want to make it impossible to do business with us. That only mean[s] that orders will go to someplace else.”
He added he is telling officials in his administration “with no excuses” to “make it EASY to do business with the United States, not difficult…. THE UNITED STATES IS OPEN FOR BUSINESS.”
The president’s tweets on the subject were so timely that they were read aloud in real time during a panel discussion with four technology export experts held at the Information Technology and Innovation Foundation headquarters in Washington. The topic of the discussion, which was webcast and available for replay, was “Controlling U.S. Tech Exports to China: How to Get It Right.”
The experts largely agreed that Trump administration recently proposed export restrictions on semiconductors and other products sold to Chinese companies could lead to loss of sales for U.S.-based companies as well as a loss of engineering talent.
One recent proposal at the Commerce Department that grew out of last year’s entity listing of Huawei as a national security threat includes blocking transactions connected to a “foreign adversary.” Another idea being considered would prevent products with 10% parts from a U.S. company being sold in China, down from 25%.
Also, The Wall Street Journal reported on Sunday that the Trump administration is considering a proposal to halt deliveries of jet engines co-produced by General Electric for a new airliner being developed in China.
Ongoing Commerce Department policy considerations are a “big issue for the U.S. semiconductor industry,” said John Neuffer, president of the Semiconductor Industry Association. “China is the biggest and fastest growing market with 35% of annual sales. That allows us to be the second largest R & D investor in the world. It’s a difficult and tricky balance between having national security protected and economic security.”
He said recent potential reforms could put controls on non-sensitive products sold to China that don’t pose a national security threat, such as semiconductors sold for use in smartphones or personal fitness wearables.
But Neuffer was encouraged by President Trump’s tweets on Tuesday. “There have been confused waters for us concerning what the U.S. government intends on doing with the Huawei market and the Chinese market generally,“ he said. Calling the president’s tweets “interesting perspectives,” he added, “I hope this brings focus” on the issues.
“As the U.S. government contemplates expanding the [export] controls in place, I’d like the U.S. government to think about the China effect and our ability to do business in China. That’s already been happening, not just Huawei as a customer, but other customers are chilling to procuring our products,” Neuffer said.
Noting that semiconductors were invented in the U.S., Neuffer said the U.S. has been a global leader in semiconductors for 50 years “but we don’t have a monopoly on them, as Korea, Taiwan, Japan and Europe sell around the world. One problem with export control is that unless it’s done multilaterally [among many countries] we just shift market share to other competitors.”
If the U.S. imposes export controls, companies could also leave the U.S., taking their engineering talent with them, panelists said.
ITIF President Robert Atkinson said he has heard from an Italian technology company that it was considering not using chips from a U.S. company apparently on the concern that the U.S. would shut off sales of its products containing those chips. Similar concerns have been raised by European Union officials, he added.
“We don’t want an economy where the IP is more valuable outside the U.S. than inside,” Neuffer added.
The panelists on the ITIF discussion urged the Trump administration to work toward greater cooperation with other countries in matters related to China and technology.
“We are not big enough to do things by ourselves,” said David Hanke, a partner at Arent Fox and a former congressional staffer who helped pen trade legislation. Kevin Wolf, a partner at Akin Gump and also a former congressional staffer who also worked on trade legislation, said export controls have a place, but he urged cooperation with other countries that face similar concerns as the U.S., such as theft of intellectual property by the Chinese.