The regulations for export controls on artificial intelligence chips left by the Biden Administration have two fundamental flaws. First, they will not stop China from developing AI. If earlier precedents hold, it will only incentivize China (and DeepSeek is a salient example They exaggerate risk and in trying to choke off diversion, instead block American companies.
Second, it will hurt the US in the global market for AI chips and data centers, creating opportunities for China do lead in this strategic market, following the path established by Huawei for telecom. The core of this competition is over who will build the infrastructure for the digital economy. The US has innate advantages, but these regulations undercut them,
The question we need to ask is how does this policy make the U.S. a market leader, because it is leading in global markets that will determine success. The AI diffusion rules do the opposite. For example, listing both Poland and Switzerland as risky destinations that deserve extra scrutiny and restraint is a conclusion best described as surreal
While the U.S. focuses on bureaucratic processes and restrictions, China continues to subsidize AI research and its semiconductor industry, threatening to surpass the US. As China reduces reliance on American-made chips, the U.S. loses negotiating power and revenue. The complexity and ambiguity of the new rules throttle innovation and slow market penetration for U.S. data center operators and chipmakers in many countries, not just China.
What the US has done now relies too much on bureaucracy and not enough on markets. It’s easy to describe in general terms what a better, regulatory arrangement would look like, one that would promote US leadership while denying China’s access to advanced AI technologies.
A better approach would:
–Amend existing country tiers to get bureaucracy out of allocating AI chips and expand markets for American firms by including safe countries
–Reinforce “Know-Your-Customer” (KYC) rules, using precedents from non-proliferation, to give more responsibility to exporters for stopping diversion and replace cumbersome licensing processes.
— Tighten bans on access to services and exports of technology to China
A series of papers in this project will examine the competition for global markets, and the place of export regulation in this. The project will also develop policy recommendations outlining the need for a revised GPU export regime, engage with stakeholders and advocate for policy changes: