Export controls on semiconductor manufacturing equipment, the machinery needed to fabricate, test, and package semiconductors, are the most decisive instruments for constraining China’s ability to produce advanced and foundational chips. Yet, policy blind spots and the inconsistent implementation of export controls in the United States have left loopholes that China has exploited to accelerate its drive to undermine American compute advantage and dominate key industries, including the foundational chip market, which produces the “workhorses” of modern life, such as the chips found in cars and refrigerators. China is now poised to surpass Taiwan as the world’s leading foundational chip producer by 2027.
The effectiveness of export controls increases significantly when a concert of like-minded countries coordinates, implements, and enforces common objectives. This type of cooperation is called plurilateralism, and it involves a small group of participants (more than two, but fewer than most multilateral arrangements) targeting a narrow set of issues. During the Cold War, the Western bloc harmonized export controls via a plurilateral regime to prevent dual-use technologies from flowing to the Soviet Union and its satellite states. Today, the United States must rally semiconductor toolmaking allies and partners to pursue plurilateral controls that prevent China from accessing semiconductor manufacturing equipment (SME) critical for its capacity to conduct economic coercion, achieve global technological dominance, and militarily threaten democratic neighbors such as Taiwan.
The foundation for a new plurilateral regime is emerging in the U.S. Congress. In late April, the House Foreign Affairs Committee advanced the Semiconductor Technology Resilience, Integrity, and Defense Enhancement Act (H.R. 6058, “STRIDE Act”), along with 21 export control bills. The STRIDE Act would require the State Department to coordinate with allies and partners on aligning export controls across the semiconductor supply chain.
If enacted, the STRIDE Act would codify an American obligation to work with allies and partners on harmonizing export controls. It would also grant the United States the flexibility to employ complementary instruments of statecraft to incentivize cooperation.
Current Gaps in Allied and American SME Export Controls
The Wassenaar Arrangement, established in 1996, is the primary multilateral export control regime for dual-use technologies. It is largely ineffective at controlling emerging technologies because of the obstructionism of adversarial members and the overly burdensome consensus-based process. Wassenaar comprises 42 members, including Russia but not China. Consensus is required to update the control list, which is implemented through each member state’s legislative process. Member states have the ultimate discretion to approve or deny the license application, and since 2022, Russia has vetoed updates to the regime, blocking the addition of controls on emerging technologies. Critically, Wassenaar sets a regulatory floor, not a ceiling: member states may impose unilateral controls beyond the regime’s list for dual-use goods and technologies, as the United States has done extensively through the Export Administration Regulations (EAR).
Each member state’s discretionary licensing policies create a regulatory gap that adversarial nations exploit to access controlled technologies. Moreover, Wassenaar’s inability to keep up with the pace and scope of today’s strategic competition has pushed the United States and key allies toward unilateral and bilateral controls outside the multilateral framework in an attempt to close loopholes that China can exploit. For example, the United States tried to close SME loopholes through the EAR’s Foreign Direct Product Rule (“FDP Rule”), but enforcement remained limited without coordination and regulatory alignment with allies. The FDP Rule extends U.S. export controls over foreign items containing technology of American origin. Beyond extraterritorial jurisdiction, the United States struck a deal with the Netherlands and Japan to harmonize a countrywide ban of the most advanced models of deep ultraviolet immersion (DUVi) lithography machines in 2023, while requiring licenses to sell older models of DUVi equipment. DUVi machines are essential for fabricating logic and memory chips, the “brains” and “filing cabinets” of modern electronic devices.
As a result of the lag between the announcement of the deal and the Netherlands’ amendment of its own rules to align with U.S. export controls on DUVi, Chinese firms rushed to stockpile older generation models. In effect, these machines remained unlicensed until the Netherlands extended controls to cover them in September 2024. Armed with this inventory, Chinese firms have employed a process called multi-patterning on older DUVi lithography machines to manufacture more advanced chips than would otherwise be physically possible.
An Export Control Regime for Today’s Advanced Technology
During the Cold War, the United States and 16 allies erected a voluntary and informal export control regime called the Coordinating Committee for Multilateral Export Controls (CoCom) to restrict the sale of arms and dual-use technologies to the Soviet bloc. CoCom enabled participating countries to review and update tailored export control lists periodically and to coordinate licensing policies. It dissolved after the fall of the Soviet Union and was succeeded by the Wassenaar Arrangement. But Wassenaar’s design is inadequate for today’s geopolitical environment. What like-minded countries need now is a new plurilateral export control regime that is nimble and sectoral-focused to supplement a ponderous and broadly scoped Wassenaar.
Therefore, the United States and its allies and partners should strive to achieve a new plurilateral export control regime—one that enhances supply chain resilience and counters China’s objectives to dominate global supply chains and advance its military modernization agenda. This could materialize in a sector-based “CoCom 2.0,” providing a platform for the United States, Japan, the Netherlands, Germany, South Korea, and Taiwan to implement targeted controls on SME as a starting point, with the goal of eventually expanding controls across the semiconductor supply chain.
The House Foreign Affairs Committee’s recent advancement of the STRIDE Act demonstrates a viable path toward a CoCom 2.0. If passed and signed into law, the STRIDE Act would effectively establish a core coordinating mechanism among techno-democracies. The law would direct the U.S. Secretary of State to identify a “shared set of objectives” with allies and partners to align export controls across the semiconductor value chain, including SME, materials, electronic design automation, and human resources. Critically, the bill aims to extend export control coordination over upstream chemical inputs, such as photoresists, specialty gases, and advanced substrates, highlighting a significant gap in the current EAR. This broad inclusion would work to prevent China’s current circumvention of export controls by also targeting inputs rather than just finished equipment.
Introducing a way to coordinate on export controls for SME could be paired with incentives for cooperation. Where the STRIDE Act would initiate the platform for member states to achieve common goals, treaty-level commitments, such as the Agreements on Reciprocal Trade (ART), could be used to incentivize alignment on export controls. For example, the U.S.-Taiwan ART offers preferable trading terms and access to the U.S. market in exchange for export control alignment. Under Article 5.2 of the ART, Taiwan is obligated to amend its export control regulations to incorporate the FDP Rule. Article 5.2 positions Taiwan as a cooperating party to enforce export controls that match the EAR. The United States could similarly negotiate agreements with other allies and partners to harmonize controls.
Although membership in the new plurilateral regime would be voluntary, the United States could also compel export control alignment among allies and partners who do not cooperate. In fact, the first CoCom was backstopped by the Mutual Defense Assistance Control Act of 1951 (also known as the “Battle Act”), which threatened to terminate “all military, economic, or financial assistance” to any country that permitted the exports of controlled technologies to the Soviet bloc. The Multilateral Alignment of Technology Controls on Hardware Act (H.R. 8170, “MATCH Act”), which advanced alongside the STRIDE Act, would be the “sticks” to STRIDE’s “carrots.” The MATCH Act would direct the Department of Commerce to assert extraterritorial jurisdiction over SME exported by allies that fail to align with U.S. regulatory restrictions on Chinese chipmaking firms within the statutory 240-day deadline. In doing so, the United States would telegraph to non-compliant allies and partners that continued SME exports to China are unacceptable.
Some allies are objecting to the proposed legislation. The Dutch Cabinet recently expressed opposition to the MATCH Act because it views the bill’s employment of the FDP Rule over Dutch SME exports as an infringement on its sovereignty. The Netherlands also fears that aligning with U.S. controls would complicate its relationship with China, which is increasingly confident in its tools of economic retaliation. The Chinese government promulgated its Regulations on Countering Improper Extraterritorial Jurisdiction by Foreign States in April, which empowers it to prohibit foreign companies operating in China from complying with “unjustified” exercises of extraterritorial jurisdiction. These regulations would effectively enable Chinese authorities to deem compliance with the United States’ FDP Rule as illegal, placing businesses such as ASML, the Dutch company that manufactures photolithography machines, under contradictory legal obligations across two jurisdictions.
Regulatory, Economic, and Strategic Gains
A new plurilateral export control regime on SME would usher in significant benefits to participating countries who enforce, administer, and update controls. Moreover, it would marshal the United States and its allies and partners behind a common objective of limiting China’s access to technologies central to its drive for strategic dominance.
For example, this new type of export control regime would reduce regulatory friction between countries by providing consistency and predictability in the enforcement and administration of export controls. When regulations and licensing policies are harmonized, cooperation between countries and firms across jurisdictions can flourish without triggering risks of violations in another jurisdiction—which, in turn, fosters technological innovation and development. Further, harmonizing allied export controls with U.S. restrictions would render the FDP Rule moot, eliminating China’s basis for invoking its regulations against foreign firms. For techno-democracies, this would be an assertion of sovereignty, not an abdication of it.
A new regime would also level the playing field among firms. American, Japanese, and Dutch companies would be subject to the same compliance, licensing, and restriction standards, evening out asymmetries in compliance costs and market access. Furthermore, companies in Taiwan, South Korea, and Japan would not have to compete with Chinese firms for shipments of ASML’s deep ultraviolet lithography machines.
Plurilateral controls on SME would also promote supply chain resilience among like-minded countries by restraining China’s surge toward dominating certain industries, especially foundational semiconductor manufacturing. Dependencies on China for the very chips that power a wide range of technologies from cars to advanced weapon systems pose significant risks to the security of the United States and its allies and partners. Thus, it is imperative to deny China the opportunity to conduct economic coercion by fortifying an alternative semiconductor supply chain.
The United States is needed to lead a complex and coordinated export control effort. Congress should pass the STRIDE Act, the MATCH Act, and the other bills supporting the U.S. Commerce Department’s enforcement capabilities. It will then be incumbent on the executive branch to demonstrate the political will to use export controls as a durable instrument of national power, and on allies and partners to match the commitment of the United States with equivalent enforcement standards.
