Two Is Not Enough: Why SME Export Controls Need More Partners

The title of a new analysis from the Washington International Trade Association makes the core argument in seven words: it takes more than two to tango. Effective export controls on semiconductor manufacturing equipment require more participants than the United States and whichever ally it has persuaded this quarter. The piece examines why controls on chip fabrication tools keep underperforming, and the answer is structural rather than legal.

Why do current controls fall short?

Export controls on semiconductor manufacturing equipment are only as tight as the narrowest exporting jurisdiction. A tool denied in one country can be shipped from another. The equipment in question — lithography systems, deposition tools, etchers and metrology gear — comes from a short list of producers concentrated in a handful of states. That concentration is precisely what makes unilateral policy brittle. Restrict one supplier and a buyer shops elsewhere.

The analysis frames this as a coordination problem, not a drafting problem. The legal machinery of export licensing can be elegant and still fail if a parallel channel remains open. Controls written for a two-party world leak in a multiparty one.

What does the equipment matter so much?

Semiconductor manufacturing equipment occupies a singular position in the technology control debate. Advanced chips cannot be made without it, and the tools themselves take years to design and build. That gives governments a natural chokepoint. A chokepoint, however, only works when every hand on the pipe agrees to squeeze. The piece argues that assembling that agreement is the actual policy task, and the harder one.

Who has to be at the table?

The argument implied by the title is that the dance currently has too few dancers. Controls negotiated between two states — however capable those states are as equipment producers — leave the rest of the supply chain unregulated. Other tool-producing countries, if outside the arrangement, become alternative suppliers. Buyers facing restrictions do not stop wanting the tools. They reroute.

This is the familiar lesson of every export control regime since the Cold War. Multilateral regimes endure because they remove the commercial penalty of going first. A single country that restricts sales simply hands revenue to competitors. A group that restricts together shares the cost and closes the gap.

What would effective controls look like?

The analysis points toward controls built as a coalition product rather than a national one. That means alignment on three fronts:

• Which equipment is covered, defined precisely enough that near-identical tools are not exempt by wording
• Which end uses and end users are restricted, so a denial cannot be laundered through intermediaries
• Which states participate, so that every significant producer sits inside the regime rather than outside it

Without all three, the regime has doors. Doors get used.

The verdict

The piece's contribution is candor about scale. Semiconductor equipment controls are often discussed as if a single government decree could hold back a global industry. It cannot. The tools are made in few places, but more than two, and each producer outside the arrangement is a workaround waiting to be priced. If Washington and its closest partner tighten rules while others sell freely, the result is a transfer of market share dressed up as a security policy.

Expect the debate to move from whether to control the equipment to who must sign on for the controls to mean anything. Until the coalition widens, licensing decisions will keep arriving at the same conclusion: the tango continues, with different partners.