New Export Controls, the Draghi Report, and Plans to Block Nippon Steel Deal
Sep 16, 2024
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Mario Draghi, former Prime Minister of Italy, shares insights on the shifting landscape of European economic policy. He discusses the new U.S. export controls on advanced technologies, particularly quantum computing, and their impact on global tech transfer. The conversation dives into Europe’s struggles with attracting investment and innovation while fostering competitiveness against U.S. industrial strategies. Draghi also addresses the political complexities surrounding the blocking of Nippon Steel's acquisition of U.S. Steel, highlighting national security and labor interests.
The U.S. has implemented stricter export controls on advanced technologies to prevent their access by adversarial nations like Russia and China.
Mario Draghi's report emphasizes the urgent need for Europe to invest 800 billion euros to improve its industrial competitiveness and attract innovation.
Deep dives
New Export Controls on Advanced Technologies
Recent changes to export controls focus on advanced technologies like quantum computing and semiconductor manufacturing. These new regulations include a presumption of denial licensing standard and a deemed export exception, specifically targeting technologies that might end up in the hands of countries like Russia or China. The controls reflect growing frustrations with the Wassenaar Arrangement, prompting the U.S. to coordinate with several partner countries outside formal agreements. The aim is to expand cooperation among these nations while establishing a framework to impose stricter export restrictions collaboratively.
Deemed Export Rule Adjustments
The deemed export rule has been expanded to allow more flexibility in hiring foreign engineers for research and development in sensitive areas like quantum technology. This approach aims to foster collaboration with top global talent while avoiding restrictions that might hinder innovation. Notably, it's acknowledged that international collaboration is crucial in rapidly evolving fields, and relaxing these rules could attract skilled professionals to the U.S. By facilitating engagement with skilled workers, the U.S. can enhance its competitive advantage in emerging technologies.
Mario Draghi's Report on European Competitiveness
A report by Mario Draghi highlights Europe's decline in industrial competitiveness and proposes significant investment to enhance its economic standing. Draghi recommends an investment of around 800 billion euros, focusing on structural changes within the European Union's economic framework to attract capital and promote innovation. The report emphasizes the need for Europe to compete effectively in global markets, particularly in light of slow growth trends among advanced economies. Addressing regulatory obstacles is deemed essential, as EU regulations often deter investment and economic growth.
Concerns Over the Nippon Steel Acquisition
There are growing political pressures surrounding Nippon Steel's acquisition of U.S. Steel, largely fueled by national security concerns. While the administration has expressed reluctance to approve the deal, much of this stems from labor union opposition and apprehensions over potential future trade implications. Detractors argue the deal could jeopardize the U.S. steel industry's ability to raise anti-dumping complaints, complicating the situation further. This reflects a broader tension between economic policy and political considerations that may impact future foreign investments in the U.S.
On this week's episode of the Trade Guys, we discuss the Commerce Department's recent export controls on quantum computing and other advanced technologies, a new report on European economic competitiveness from Mario Draghi, and reporting that the Biden Administration plans to block Nippon Steel's $14.9 billion acquisition of U.S. Steel.
Want to learn more about the intricacies of Washington? Sign up for Decoding D.C.: Policy, Power, and People, a CSIS executive education course featuring Trade Guy Scott Miller.
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