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1、U.S.-ROK TECH COOPERATIONEXPORT CONTROLS,DATA POLICY,AND ARTIFICIAL INTELLIGENCEEdited by Gwanhoo Lee and Doug Strub NBR Board of AdvisorsWilliam Abnett NBRDennis C.Blair Admiral,U.S.Navy(ret.)Ketty Chen Taiwan Foundation for DemocracyJosh Corless ConocoPhillipsLinda Distlerath PhRMA(ret.)Nicholas E

2、berstadt American Enterprise InstituteKarl Eikenberry Former Ambassador(U.S.);Lt.General,U.S.Army(ret.)Bates Gill Asia Society Policy InstituteClara Gillispie NBRStephen Hanson College of William and MaryHarry Harding University of VirginiaMikkal Herberg University of California San DiegoCarla A.Hil

3、ls Hills&CompanyRobert Holleyman C&M InternationalChun In-Bum Lt.General,ROK Army(ret.)Mark Jones Kingswood Capital SolutionsAmit Kapoor India Council on CompetitivenessTariq Karim Former Ambassador(Bangladesh);Independent UniversityHeino Klinck U.S.Army/Department of Defense(ret.)David Lampton John

4、s Hopkins University Stephen Lanza Lt.General,U.S.Army(ret.)Nicholas Lardy Peterson Institute for International EconomicsRichard Lawless New Magellan VenturesWilliam McCahill Department of State(ret.)Dewardric L.McNeal Longview GlobalMeredith Miller Albright Stonebridge GroupTami Overby Albright Sto

5、nebridge GroupJohn S.Park Harvard Kennedy SchoolPamela Passman APCO WorldwideRajeswari Rajagopalan Observer Research FoundationEvans Revere Department of State(ret.)Clarine Nardi Riddle Kasowitz,Benson,Torres&Friedman LLPRyo Sahashi University of TokyoUlrike Schaede University of California San Dieg

6、oRobert Scher BPDavid Shambaugh George Washington UniversityBenjamin Shobert MicrosoftMike Studeman Rear Admiral,U.S.Navy(ret.)Travis Sullivan Boeing CompanyTravis Tanner Greenpoint GroupArzan Tarapore Stanford UniversityJessica Teets Middlebury CollegeDebra Waggoner Corning(ret.)Dana White AnkuraNB

7、R Chairs and CounselorsRichard J.Ellings NBR(ret.)Thomas B.Fargo Admiral,U.S.Navy(ret.)Aaron L.Friedberg Princeton UniversityCharlene Barshefsky U.S.Trade Representative(ret.)Charles W.Boustany Jr.U.S.House of Representatives(ret.)Norman D.Dicks U.S.House of Representatives(ret.)Jonathan W.Greenert

8、Admiral,U.S.Navy(ret.)John M.Shalikashvili ChairAshley J.Tellis Carnegie Endowment for International PeaceNBR Board of DirectorsJohn V.Rindlaub(Chair)Regional President(ret.)Wells Fargo Asia Pacific Ahn Ho-young Former Ambassador(South Korea)Thomas W.Albrecht(Vice Chair)Partner(ret.)Sidley Austin LL

9、PRichard J.Ellings President Emeritus and Counselor NBRKurt Glaubitz(Vice Chair)General Manager,Corporate Affairs Asia Pacific Exploration and Production Chevron CorporationCharles Hooper Senior Counselor The Cohen GroupRoy D.Kamphausen President NBRQuentin W.Kuhrau(Treasurer)Chief Executive Officer

10、 Unico Properties LLCMelody Meyer President Melody Meyer Energy LLCHuan Nguyen Rear Admiral(ret.),U.S.Navy;Senior Advisor to Naval Sea Systems CommandLong Nguyen Chairman,President,and CEO Pragmatics,Inc.Kenneth B.Pyle Professor,University of Washington Founding President,NBR Jonathan Roberts Founde

11、r and Partner Ignition PartnersTom Robertson Corporate Vice President and Deputy General Counsel MicrosoftMitchell B.Waldman Principal M Barnet Advisors LLCCynthia A.Watson Professor and Dean Emerita National War CollegeHonorary DirectorGeorge F.Russell Jr.Chairman Emeritus Russell Investmentsthe na

12、tional bureau of asian researchnbr special report#107|march 2024This report was produced by the National Bureau of Asian Research with support from the Korea Foundation.u.s.-rok tech cooperationExport Controls,Data Policy,and Artificial IntelligenceEdited byGwanhoo Lee and Doug Strubthe national bur

13、eau of asian researchThe NBR Special Report provides access to current research on special topics conducted by the worlds leading experts in Asian affairs.The views expressed in these reports are those of the authors and do not necessarily reflect the views of other NBR research associates or instit

14、utions that support NBR.The National Bureau of Asian Research helps decision-makers better understand Asia and craft concrete,actionable policy.NBR is an independent research institution based in Seattle and Washington,D.C.We bring world-class scholarship to bear on the evolving strategic environmen

15、t in Asia through original,policy-relevant research,and we invest in our future by training the next generation of Asia specialists.Our research is conducted by a global network of specialists and tackles critical issues identified by stakeholders in anticipation of future challenges.The findings ar

16、e a result of independent scholarship and do not reflect institutional perspectives.Our rigorous standards facilitate informed decision-making based on knowledge rather than ideology.Established in 1989,NBR is a legacy organization of Senator Henry M.Jackson,who foresaw the national need for an inst

17、itution to study and inform public policy on Asia in both the public and private sectors.Building on Senator Jacksons bipartisan approach,NBR engages policymakers looking for reliable Asia expertise through sustained interaction in high-trust,nonpartisan settings.Our experts and research have shaped

18、 congressional legislation and administration policies,brought issues to the top of the U.S.foreign policy agenda,and attracted worldwide media attention.We mobilize expertise on Asia for a more effective foreign policy.NBR receives support from foundations,corporations,government(including foreign

19、governments of allies and liberal democracies),and public agencies,and philanthropic individuals.NBR reserves the right to publish findings.We do not undertake classified or proprietary research work,and we observe policies to avoid conflicts of interest.To download issues of the NBR Special Report,

20、please visit the NBR website http:/www.nbr.org.This report may be reproduced for personal use.Otherwise,the NBR Special Report may not be reproduced in full without the written permission of NBR.When information from NBR publications is cited or quoted,please cite the author and The National Bureau

21、of Asian Research.This is the one-hundred-and-seventh NBR Special Report.NBR is a tax-exempt,nonprofit corporation under I.R.C.Sec.501(c)(3),qualified to receive tax-exempt contributions.2024 by The National Bureau of Asian Research.Cover design and illustration by Nate Christenson.For further infor

22、mation about NBR,contact:The National Bureau of Asian Research One Union Square 600 University Street,Suite 1012 Seattle,Washington 98101206-632-7370 Phone nbrnbr.org E-mail http:/www.nbr.orgu.s.-rok tech cooperationExport Controls,Data Policy,and Artificial IntelligenceTABLE OF CONTENTS 1 Introduct

23、ion:Fostering U.S.-ROK Cooperation on Emerging Technologies and DataGwanhoo Lee 9 Export Control Policies in U.S.-ROK Relations11 U.S.Export Controls in the Era of Strategic Competition:Implications for South Korea Mireya Sols18 The Impact of Export Controls on South Korean Companies and Pathways to

24、 Plurilateral Cooperation Jungmin Pak,Hyunsoo Joo,and Haeyoon Chung24 Policy Options to Increase U.S.-ROK Export Control Cooperation Mireya Sols and Jungmin Pak 27 Pathways for U.S.-ROK Collaboration on Artificial Intelligence29 ROK Policies for Innovation and Competitiveness in the Global AI Arena

25、Ahram Moon36 U.S.AI Policies and Opportunities for Collaboration with the ROK Cole McFaul 43 Policy Options to Advance U.S.-ROK Cooperation on AI Ahram Moon and Cole McFaulnbr special report#107|march 2024 45 U.S.-ROK Data Policy:Challenges and Opportunities47 Barriers and Bridges to U.S.-ROK Cooper

26、ation on Data Governance and Digital Trade Nigel Cory53 The International Transfer of Personal Information under South Koreas Personal Information Protection Act Nohyoung Park59 Policy Options to Strengthen U.S.-ROK Data Policies Nigel Cory and Nohyoung Park1the national bureau of asian researchnbr

27、special report#107|march 2024GWANHOO LEE is a Professor in the Kogod School of Business at American University.He can be reached at.Introduction:Fostering U.S.-ROK Cooperation on Emerging Technologies and DataGwanhoo Lee3INTRODUCTION u LEET he world is witnessing unprecedented sea changes brought ab

28、out by the development of artificial intelligence(AI)and other critical and emerging technologies,such as advanced semiconductor chips.The exponential growth of global data fuels the power of these technologies.AI has profound impacts on society,the economy,global affairs,and even human existence.1

29、The competitive dynamics in AI development between the United States and the Peoples Republic of China(PRC)have accelerated,as the PRC is seeking to compete for AI leadership with the United States by leveraging its access to large data sets,ambitious entrepreneurs,and supportive government policies

30、.2 Semiconductors are an essential component of advanced technology such as AI and electric vehicles(EVs)and have significant implications for global geopolitics and economics as well as national security.Control over semiconductor supply chains is a key factor in the balance of international power.

31、3U.S.Export Controls on Critical and Emerging TechnologiesIn recent years,amid growing U.S.-PRC tension over critical and emerging technologies,the United States has overhauled its export control regime.Recognizing that existing multilateral agreements were insufficient for the PRC challenge,Washing

32、ton adopted a series of unilateral policies to protect emerging and foundational technologies for national security.The CHIPS and Science Act,signed into law by President Joe Biden on August 9,2022,aims to enhance the United States competitiveness in science and technology.The CHIPS Act prioritizes

33、investment in semiconductor manufacturing,research,and development to decrease reliance on foreign chip production.4 It allocates funds for semiconductor research and production,which will bolster supply chain resilience.Additionally,the legislation includes initiatives to improve scientific researc

34、h,STEM education,and workforce development in various tech areas,which will boost U.S.innovative capacities.A week after the CHIPS and Science Act was signed,President Biden signed the Inflation Reduction Act on August 16,2022.5 This legislation focuses on climate change,healthcare costs,and tax ref

35、orm.While not directly addressing export controls for EVs and batteries,the Inflation Reduction Act significantly affects the EV sector,mainly through tax incentives.It also includes provisions for investment in the U.S.production of EV batteries,potentially influencing the global battery supply cha

36、in and indirectly altering export dynamics.On October 7,2022,the U.S.Department of Commerces Bureau of Industry and Security(BIS)issued new export controls to limit Chinas military advancements by restricting access to advanced AI chips produced with U.S.technology.6 These measures are part of ongoi

37、ng efforts to safeguard U.S.national security and foreign policy interests.The updates specifically aim to hinder Chinas procurement and production of high-end chips for military use.On October 17,2023,a year after its initial rule was set,BIS updated its regulations to address loopholes in the 1 He

38、nry A.Kissinger,Eric Schmidt,and Daniel Huttenlocher,The Age of AI and Our Human Future(London:Hachette UK,2021).2 Kai-Fu Lee,AI Superpowers:China,Silicon Valley,and the New World Order(New York:Houghton Mifflin,2018).3 Chris Miller,Chip War:The Fight for the Worlds Most Critical Technology(New York

39、:Simon and Schuster,2022).4 The text of the CHIPS and Science Act is available at https:/www.congress.gov/bill/117th-congress/house-bill/4346.5 White House,Building a Clean Energy Economy:A Guidebook to the Inflation Reduction Acts Investments in Clean Energy and Climate Action,version 2(Washington,

40、D.C.,January 2023),https:/www.whitehouse.gov/wp-content/uploads/2022/12/Inflation-Reduction-Act-Guidebook.pdf.6“Commerce Implements New Export Controls on Advanced Computing and Semiconductor Manufacturing Items to the Peoples Republic of China(PRC),”U.S.Department of Commerce,Bureau of Industry and

41、 Security,Press Release,October 7,2022,https:/www.bis.doc.gov/index.php/documents/about-bis/newsroom/press-releases/3158-2022-10-07-bis-press-release-advanced-computing-and-semiconductor-manufacturing-controls-final.4NBR SPECIAL REPORT u MARCH 2024original rules.The revision included changes to the

42、Validated End-User Program,specifically authorizing Samsung(China)Semiconductor Co.,Ltd.and SK Hynix Semiconductor(China),Ltd.to receive various items governed by the Export Administration Regulations.However,this authorization excludes certain extreme ultraviolet equipment and components related to

43、 NAND memory development or production.7These recent U.S.export controls,however,have posed difficulties for South Korean firms exporting common commercial technologies to civilian users,indicating potential misalignment in the targeting of export control policies.In particular,semiconductor giants

44、in the Republic of Korea(ROK),like Samsung Electronics and SK Hynix,which are crucial to the countrys technological and economic growth,find their substantial business interests in the PRC entangled with U.S.export control policies.8 These companies have major investments in production facilities in

45、 China,and China has become the biggest export market for them.With advanced semiconductors being a central focus of U.S.export control policies,these companies face challenges to their revenue and profitability,potentially hindering their R&D and innovation investments.South Korean policymakers are

46、 aware of the disproportionate effects of these unilateral U.S.export control policies,which create obstacles to deeper U.S.-ROK collaboration on critical emerging technologies.U.S.Policies Aiming to Secure Leadership in Safe,Responsible AIThe United States wants to be a global leader in AI developm

47、ent.Vice President Kamala Harris said:“Let us be clear:When it comes to AI,America is a global leader.It is American companies that lead the world in AI innovation.It is America that can catalyze global action and build global consensus in a way that no other country can.”9 At the same time,China al

48、so wants to be a global leader in the sector.In October 2017 the State Council of the PRC designated AI a national priority,setting a goal for the country to emerge as the leading AI innovation hub worldwide by 2030.As the competition between the United States and China in the AI race intensified,th

49、e United States issued a series of policies to ensure safe,secure,and trustworthy AI development.On October 5,2022,the White House unveiled the AI Bill of Rights.10 This document outlines key principles aimed at protecting peoples privacy and civil rights by ensuring that AI development is more tran

50、sparent and responsible.Precautions include monitoring for inaccurate and biased data,among others.A year after releasing the AI Bill of Rights,on October 30,2023,President Biden issued a landmark executive order to promote the safe,secure,and trustworthy development 7“Commerce Strengthens Restricti

51、ons on Advanced Computing Semiconductors,Semiconductor Manufacturing Equipment,and Supercomputing Items to Countries of Concern,”BIS,U.S.Department of Commerce,Press Release,October 17,2023,https:/www.bis.doc.gov/index.php/documents/about-bis/newsroom/press-releases/3355-2023-10-17-bis-press-release

52、-acs-and-sme-rules-final-js/file.8 Kim Hoe-seung et al.,“Koreas Dilemma:U.S.-Led Chip Alliance or Chinese Market?”Hankyoreh,July 21,2022,https:/english.hani.co.kr/arti/english_edition/e_business/1051886.html.9“Remarks by President Biden and Vice President Harris on the Administrations Commitment to

53、Advancing the Safe,Secure,and Trustworthy Development and Use of Artificial Intelligence,”White House,October 30,2023,https:/www.whitehouse.gov/briefing-room/speeches-remarks/2023/10/30/remarks-by-president-biden-and-vice-president-harris-on-the-administrations-commitment-to-advancing-the-safe-secur

54、e-and-trustworthy-development-and-use-of-artificial-intelligence.10 White House,Blueprint for an AI Bill of Rights:Making Automated Systems Work for the American People(Washington,D.C.,October 2022),https:/www.whitehouse.gov/ostp/ai-bill-of-rights.5INTRODUCTION u LEEand use of AI.11 It sets new stan

55、dards for AI safety,mandates disclosure of safety test results by developers of significant AI systems,and introduces measures to mitigate AI-related risks,such as the misuse of AI to create hazardous biological materials.The executive order prioritizes privacy protection,advocating for privacy-pres

56、erving AI technologies and federal data privacy laws.It tackles issues of equity and civil rights,seeking to prevent AI-driven discrimination across sectors.It also promotes responsible AI use in healthcare and education,addresses the impact on labor markets,and encourages innovation and competitive

57、ness,with an emphasis on the federal governments responsible use of AI and international coordination for a common AI framework.The profound impact of AI on the global economy and politics led the United Kingdom to host an AI Safety Summit in November 2023 at Bletchley Park.The summit convened leade

58、rs in the AI space,including international governments,companies,civil society groups,and experts,to understand the risks of AI and to discuss risk mitigation through global coordination and action.The summits Bletchley Declaration emphasizes the critical need for collaboration across governments,bu

59、sinesses,academia,and civil society to tackle the challenges imposed by frontier AI.It highlights the significance of sharing information and cooperative practices in AI safety,including the agreement on AI model safety testing and independent evaluation.The declaration advocates for robust policies

60、 like setting international safety standards,verifying the safety of AI models before deployment,and involving governments in the testing process throughout the AI lifecycle.It also calls for equitable AI access and benefits in various sectors,stressing the urgency of safe AI development and the imp

61、ortance of building public trust in AI.12Data Governance ChallengesData has become essential in driving AI development,digital transformation,and the growth of the digital economy.It has a significant impact on cross-border digital services and technologies.However,issues regarding data privacy,owne

62、rship,and security are contentious,particularly in cross-border contexts.Consequently,policies governing data privacy and international data flows are crucial for domestic growth and international technological and economic collaboration.The ROK has established itself as a leader in data governance,

63、thanks to the Personal Information Protection Act and the Network Act,combined with institutional support from the government.Over the past decade,the United States has issued a series of policies to promote data transparency,privacy,and security.President Barack Obamas executive order“Making Open a

64、nd Machine Readable the New Default for Government Information,”issued on May 9,2013,mandates that government data must be made available in open,machine-readable formats by default.13 This initiative aims to enhance transparency,promote innovation,and improve efficiency by making government data ac

65、cessible to the public,entrepreneurs,and other stakeholders.The executive order requires federal agencies to publish their information in these formats and create an inventory of available data,supporting the development of new applications and services 11 White House,“Executive Order on the Safe,Se

66、cure,and Trustworthy Development and Use of Artificial Intelligence,”October 30,2023,https:/www.whitehouse.gov/briefing-room/presidential-actions/2023/10/30/executive-order-on-the-safe-secure-and-trustworthy-development-and-use-of-artificial-intelligence.12“The Bletchley Declaration by Countries Att

67、ending the AI Safety Summit,12 November 2023,”November 1,2023,https:/www.gov.uk/government/publications/ai-safety-summit-2023-the-bletchley-declaration/the-bletchley-declaration-by-countries-attending-the-ai-safety-summit-1-2-november-2023.13 White House,“Executive OrderMaking Open and Machine Reada

68、ble the New Default for Government Information,”May 9,2013,https:/obamawhitehouse.archives.gov/the-press-office/2013/05/09/executive-order-making-open-and-machine-readable-new-default-government-.6NBR SPECIAL REPORT u MARCH 2024using government data.On June 9,2021,President Biden issued the executiv

69、e order“Protecting Americans Sensitive Data from Foreign Adversaries.”14 It addresses the risks associated with foreign adversaries accessing large data sets of sensitive personal information through evaluating and managing the risks posed by software applications developed or supplied by foreign en

70、tities.The executive order directs the implementation of measures to counter these data privacy risks while maintaining an evidence-based,criteria-driven approach.Although the ROKs data governance regime is considered one of the most mature and advanced in the world,15 legislation proposed in South

71、Korea concerning network fees and in-app payments has sparked concerns in the U.S.business and tech sectors about over-regulation and potential market distortions.On the other hand,the United States still lacks a unified national approach to data privacy and protection,making it challenging for comp

72、anies to navigate the patchwork of regulations and ensure adequate data protection for users.16U.S.-ROK Cooperation on Critical and Emerging Technologies and DataThe tremendous opportunities and daunting challenges presented by AI development,the profound impact of advanced semiconductors on nationa

73、l security and global geopolitics,and the difference in approaches to cross-border data flows require the United States to cooperate closely with its technologically advanced allies,such as South Korea.Amid U.S.-PRC trade tensions and pandemic-induced supply chain issues,the importance of internatio

74、nal collaboration has grown.The CHIPS and Science Act signifies widespread agreement in the United States regarding the significance of maintaining leadership in critical and emerging technologies,for both the United States and its allies.This aligns with President Yoon Suk Yeols commitment,followin

75、g the 2021 announcement of the K-Semiconductor Belt strategy,to make South Korea a top semiconductor powerhouse by 2030.In February 2022,the Biden administrations new Indo-Pacific Strategy highlighted the need to“work with partners to advance common approaches to critical and emerging technologies.”

76、17 This was further underlined in the Biden-Yoon joint statement in May 2022,stressing cooperation in advanced technologies like“leading-edge semiconductors,eco-friendly EV batteries,AI,quantum technology,biotechnology,biomanufacturing,and autonomous robotics.”18 Enhanced technological cooperation b

77、etween the United States and the ROK,especially in AI and semiconductors,could significantly bolster the leadership positions of both nations in these critical sectors.The Global Cross-Border Privacy Rules Declaration,announced by the U.S.Department of Commerce,emphasizes the development of a global

78、 privacy framework.19 Its main points include 14 White House,“Executive Order on Protecting Americans Sensitive Data from Foreign Adversaries,”June 9,2021,https:/www.whitehouse.gov/briefing-room/presidential-actions/2021/06/09/executive-order-on-protecting-americans-sensitive-data-from-foreign-adver

79、saries.15 Clara Gillispie,“How Can South Korea Teach,Lead,and Better Engage with the Asia-Pacific in Shaping Data Governance for the 5G Era?”Asia Policy 16,no.4(2021):14366.16 Paul Pittman,Kyle Levenberg,and Shira Shamir,“Data Protection Laws and Regulations USA 2022,”Global Legal Group,August 7,202

80、2,https:/ White Houe,Indo-Pacific Strategy of the United States(Washington,D.C.,February 2022),https:/www.whitehouse.gov/wp-content/uploads/2022/02/U.S.-Indo-Pacific-Strategy.pdf.18“United StatesRepublic of Korea Leaders Joint Statement,”White House,May 21,2022.https:/www.whitehouse.gov/briefing-roo

81、m/statements-releases/2022/05/21/united-states-republic-of-korea-leaders-joint-statement.19“Global Cross-Border Privacy Rules Declaration,”U.S.Department of Commerce,https:/merce.gov/global-cross-border-privacy-rules-declaration.7INTRODUCTION u LEEfostering international cooperation to facilitate cr

82、oss-border data flows while ensuring data privacy and protection.The declaration seeks to create interoperable privacy standards,improve trust and confidence in the digital economy,and support the participation of a diverse range of economies.The goal is to bridge different privacy regimes,ensuring

83、effective protection and enforcement of privacy rules globally.With the Yoon administrations ambition to develop the worlds best digital platform government connecting all data from the public and private sectors,it is increasingly vital for the United States and the ROK to resolve differences in da

84、ta policy,find mutually acceptable bilateral solutions,and shape regional and global digital norms to align with their shared interests.Organization of the ReportAgainst the backdrop of the increasing global competition over AI and semiconductors and the compelling need for streamlining cross-border

85、 data flows,this report aims to analyze the current state of U.S.-ROK cooperation on technology and data,identify challenges and barriers to greater collaboration,and propose practical options for policymakers and businesses in both countries to advance their common interests.This report also seeks

86、to bring together the technology and policy communities in both nations by suggesting ways to strengthen technology partnerships across government,industry,and academia.To this end,experts from the United States and the ROK collaborated to author chapters on export controls,AI,and data policy.Each c

87、hapter includes sections in which the U.S.and ROK authors,respectively,present their analysis and perspectives on the given topic,followed by a jointly authored concluding section with a set of policy options.In the chapter on export controls,Mireya Sols discusses the escalating U.S.-China tech riva

88、lry,emphasizing U.S.efforts to safeguard emerging technologies like AI,semiconductors,and quantum computing through stringent export controls.She highlights the crucial role of South Korea,a key U.S.ally with strengths in semiconductors and EVs,in bolstering these efforts.However,she also acknowledg

89、es the challenges in aligning U.S.and ROK policies and the impact of U.S.restrictions on Chinese access to advanced technologies,particularly in the semiconductor industry.She underscores the complexity of U.S.export controls amid geopolitical shifts.Next,Jungmin Pak and his colleagues examine the i

90、mpact of U.S.semiconductor export controls on the global industry,with a focus on South Korea.The U.S.restrictions aiming to limit Chinas access to advanced technology significantly affect South Korean firms due to their extensive operations in China.These measures have created operational uncertain

91、ties and challenges for South Koreas semiconductor industry,which is heavily reliant on both the U.S.and Chinese markets.The authors underscore the need for collaborative U.S.-ROK approaches to export controls,advocating for a cooperative framework that balances national interests and maintains indu

92、stry stability.In the chapter on AI,Ahram Moon emphasizes the role of AI as a catalyst for economic growth globally.As countries are competing to create policies for safe and responsible AI use,she acknowledges that innovation requires collaboration among various stakeholders for resources like comp

93、uting power,data,and cloud services.She highlights the limitations of single-country efforts in establishing AI ethics and safety,advocating for global cooperation.She examines South Koreas AI ecosystem,reviewing its policy landscape and exploring challenges and opportunities for U.S.-ROK collaborat

94、ion on responsible AI development.In the second part of the chapter,Cole McFaul highlights the escalating role of AI in global security and economic 8NBR SPECIAL REPORT u MARCH 2024sectors,emphasizing U.S.and South Korean efforts to govern AI development responsibly.He recognizes the broad impact of

95、 AI across industries and its potential for misuse.The United States is engaging allies,notably South Korea,to counter rivals like China in AI advancement.Despite challenges in policy harmonization and research partnerships,a strong U.S.-ROK alliance in AI is vital to influence global standards and

96、safeguard mutual interests.In the concluding chapter on data policy,Nigel Cory discusses the underutilized potential in U.S.-ROK cooperation in digital and high-tech sectors,despite the two countries leadership in technology and close alliance.Differing approaches to data governance provide a key ch

97、allenge by impeding cross-border data flows.He advocates for diversified and inclusive bilateral engagement,incorporating commercial and regulatory bodies alongside diplomatic channels.He also argues for aligned strategies and policies on data protection and cloud services between the United States

98、and the ROK.Enhanced collaboration is viewed as crucial to balancing national security with innovation and trade in the digital economy.Nohyoung Park then analyzes South Koreas Personal Information Protection Act and its 2023 amendments,which expanded the legal bases for international personal data

99、transfer to align more with global data governance norms.Initially restrictive,the law has undergone revisions aimed at facilitating data flows while ensuring protection,introducing mechanisms like the reciprocity principle,and encouraging other countries to liberalize their data policies.He highlig

100、hts South Koreas role in international data transfer frameworks and trade treaties,emphasizing the need for further alignment with global standards.In its entirety,this report discusses important opportunities and significant challenges as the United States and the ROK cooperate to assume global lea

101、dership in AI,semiconductors,and data governance and offers insights and policy options to foster collaboration going forward.9the national bureau of asian researchnbr special report#107|march 2024Export Control Policies in U.S.-ROK RelationsMireya Sols and Jungmin Pak,Hyunsoo Joo,and Haeyoon ChungE

102、XECUTIVE SUMMARYThis chapter analyzes the differing approaches to export controls in the U.S.and the Republic of Korea(ROK)and identifies potential pathways to strengthen collaboration,minimize challenges,and increase the effectiveness of these policies.MAIN ARGUMENT In the first section,Mireya Sols

103、 examines the drivers,tools,and objectives of the U.S.approach to export controls and argues that greater allied cooperation,including between the U.S.and the ROK,is essential for U.S.-led export controls to be effective.Nevertheless,the challenges of export control coordination are steep.Gaps in th

104、reat perception over the risks posed by Chinas technological deepening,different competitive niches within the vast semiconductor supply chain,asymmetrical vulnerabilities to potential Chinese retaliation,and dissimilar legal regimes governing the export of sensitive technologies and products can be

105、 daunting barriers limiting the degree of coordination,even among allied countries.In the second section,Jungmin Pak,Hyunsoo Joo,and Haeyoon Chung assess the impact of the U.S.export controls on Korean companies.While the ROK government understands the reasoning behind the U.S.s unilateral impositio

106、n of these controls,the authors argue that their erratic and unpredictable application,coupled with the absence of consistent long-term policies,creates unnecessary challenges for allied countries.While some steps have been taken to mitigate these negative impacts,a more stable and predictable polic

107、y environment is needed.POLICY IMPLICATIONS The strict U.S.export controls implemented in recent years are ambitious in their objectives and execution,but to be effective they need the support of like-minded,technologically advanced countries.Export controls affect economies in unique ways,and more

108、coordination and planning are needed to minimize negative consequences for partners and allies.Restrictions on the export of technology do not operate in a vacuum.Therefore,the design of export control policies should take into account the combined impact of other economic security measures such as

109、FDI screenings,industrial policies,and subsidy programs.At a time when deepening geopolitical divides hamper the operation of multilateral export control regimes,the importance of developing effective plurilateral regimes has increased.11EXPORT CONTROLS u SOLS T his chapter analyzes the differing ap

110、proaches to export controls in the United States and the Republic of Korea(ROK)and identifies potential pathways to strengthen collaboration,minimize challenges,and increase the effectiveness of these policies.In the first section,Mireya Sols examines the drivers,tools,and objectives of the U.S.appr

111、oach to export controls and argues that greater allied cooperation,including between the United States and the ROK,is essential for U.S.-led export controls to be effective.Nevertheless,the challenges of export control coordination are steep.Gaps in threat perception over the risks posed by Chinas t

112、echnological deepening,different competitive niches within the vast semiconductor supply chain,asymmetrical vulnerabilities to potential Chinese retaliation,and dissimilar legal regimes governing the export of sensitive technologies and products can be daunting barriers limiting the degree of coordi

113、nation,even among allied countries.In the second section,Jungmin Pak,Hyunsoo Joo,and Haeyoon Chung assess the impact of the U.S.export controls on Korean companies.While the ROK government understands the reasoning behind the United States unilateral imposition of these controls,the authors argue th

114、at their erratic and unpredictable application,coupled with the absence of consistent long-term policies,creates unnecessary challenges for allied countries.While some steps have been taken to mitigate these negative impacts,a more stable and predictable policy environment is needed.The chapter conc

115、ludes by considering policy options for improving U.S.-ROK coordination on export controls and maximizing their effectiveness.U.S.Export Controls in the Era of Strategic Competition:Implications for South Korea1Mireya Sols As the U.S.-China relationship grows more competitive,the development and pro

116、tection of sensitive technologies have become pressing tasks for U.S.policymakers.In the midst of rapid technological advancements in areas such as artificial intelligence(AI),microelectronics,and quantum computing,the United States has become more concerned with shoring up critical infrastructure a

117、nd preventing leakages of advanced technologies that China could use to build up its military capabilities.Tighter rules and novel uses of export controls have been a feature of Republican and Democratic administrations alike,with China foremost in mind.Central to the success of U.S.export controls

118、is the ability to enlist the support of like-minded countries.Plurilateral export controls are more effective in restricting the supply of sensitive technologies,facilitating more efficient monitoring of compliance,and boosting the legitimacy of the technology restrictions.They also obviate the need

119、 for extraterritorial measures that rankle allies and help assuage U.S.firms that they will not be designed out of new products as foreign manufacturers hedge against the risk of tighter controls on U.S.technology and equipment.Nevertheless,differences in export control regimes,the competitive niche

120、s of each partners advanced manufacturing ecosystems,and gaps between their respective China policies create hurdles to effective coordination.1 This section is authored by Mireya Sols,who is director of the Center for East Asia Policy Studies at the Brookings Institution.She can be reached at .12NB

121、R SPECIAL REPORT u MARCH 2024Cooperation with South Korea,a close U.S.ally in Asia and a leading technological power globally,will increase the effectiveness of U.S.export control policies.South Korean firms have a competitive edge in memory semiconductors,specialized chip manufacturing equipment,an

122、d electric batteries and electric vehicles(EVs).With the announcement of investments in the United States upward of$100 billion,Korean companies are expanding manufacturing capacity in sectors where the United States aims to boost supply chain resilience(chips)and advance the green transition(EVs).2

123、 The administrations of Presidents Joe Biden and Yoon Suk Yeol have declared their intention to develop a“global comprehensive strategic alliance,”with cooperation in emerging technologies and economic security as key pillars of the partnership.3 Yet,coordination on advanced technology export restri

124、ctions has proved challenging.When the United States revamped its export control policies in October 2022 to prevent Chinas access to advanced chips and the equipment to produce them indigenously,South Koreas semiconductor giants Samsung Electronics and SK Hynix were left in limbo.They were granted

125、just a one-year waiver to continue to supply equipment to sustain operations in their large chip fabrication plants(fabs)in China.After intense bilateral consultations,the United States one year later recognized these two South Korean firms as validated end users,exempting them from the requirement

126、to apply for case-by-case licenses.4 While this was welcome news for the South Korean government and industry,the uncertainty over the long-term future of advanced chip manufacturing in China has not fully abated.Technological upgrading is still restricted by U.S.controls,and South Korean firms with

127、 fabs in China may yet be affected by U.S.-China technology competition.Moreover,recent advancements in the U.S.-ROK relationship only amounted to a damage-control exercise,not a broader realignment of export control policies.Hence,the potential for more effective coordination that can cement the tr

128、ansformation of the U.S.-ROK alliance into a comprehensive partnership in technology is still unrealized.The Era of U.S.-China Strategic RivalryOver the course of the 21st century,U.S.-China relations have experienced a profound shift away from engagement and toward strategic rivalry.The competitive

129、 drivers are strong across both the security and economic domains,with the technology race becoming a focal point.The bilateral relationship and global geopolitical landscape changed with the remarkable economic rise and military modernization that China has achieved in the past few decades.Chinas r

130、ole in the manufacturing value chain has also morphed from a low-cost assembly hub to one of greater advanced manufacturing capabilities and growing ambitions for cutting-edge technological development.In addition to these structural shifts,the evolution of Chinas domestic political and economic sys

131、tems and Beijings more assertive foreign policy are key factors behind the competitive turn.The centralization of power under President Xi Jinping intensified domestic authoritarian control with the rise of a surveillance state.Meanwhile,the spirit of“reform and opening up”2“Republic of Korea States

132、 Visit to the United States,”White House,Fact Sheet,April 26,2023,https:/www.whitehouse.gov/briefing-room/statements-releases/2023/04/26/fact-sheet-republic-of-korea-state-visit-to-the-united-states.3“United StatesRepublic of Korea Leaders Joint Statement,”White House,Press Release,May 21,2022,https

133、:/www.whitehouse.gov/briefing-room/statements-releases/2022/05/21/united-states-republic-of-korea-leaders-joint-statement.4“Commerce Issues Rule to Strengthen National Security Partnership to Secure Semiconductor Supply Chains with Republic of Korea,”U.S.Department of Commerce,Bureau of Industry and

134、 Security,Press Release,October 13,2023,https:/www.bis.doc.gov/index.php/documents/about-bis/newsroom/press-releases/3351-2023-10-13-bis-press-release-rok-veus/file.13EXPORT CONTROLS u SOLS that previously guided Chinese economic policy waned,and the“hide and bide”approach that counseled moderation

135、gave way to a more assertive foreign policy.5Decades of weaving a vast and intricate global economic tapestry through trade and investment flows,coupled with the integration of China into the international trading system,including through a central role in the increasingly complex networks of global

136、 supply chains,have given rise to new challenges that have soured attitudes toward these arrangements.Hence,geoeconomics is a fundamental axis of the new era of strategic competition.Both China and the United States are maneuvering to sustain the economic benefits of interdependence while hedging ag

137、ainst the risks of overdependence and using their command of chokepoints in strategic supply chains as potential levers of influence.Chinas ambitions to achieve self-sufficiency in cutting-edge manufacturing were advertised in its Made in China 2025 policy document.These ambitions manifested in mass

138、 subsidization of the semiconductor industry and other advanced technologies,the proliferation of national security controls governing economic transactions at home and abroad,and the flexing of Chinas economic influence as a tool of both engagement(e.g.,infrastructure finance and trade negotiations

139、)and coercion(e.g.,informal boycotts of goods amid political disputes and restrictions on critical mineral exports).For the United States,the China challenge has only grown in complexity.Long-standing complaints about the lack of a level playing field for U.S.firms in the Chinese market,theft of int

140、ellectual property,and the loss of domestic factory jobs due to Chinese imports have been superseded by the strategic implications of Chinas growing technological prowessaided by the heavy hand of the stateand the leakage of critical technologies that can be siphoned off toward military purposes.As

141、such,the export controls on technology discussed in this chapter are central to the U.S.-China contest.But they are also part of a broader retooling of policy instruments following the logic of strategic competition:The Committee on Foreign Investment in the United States has received an expanded ma

142、ndate to review noncontrolling investments in critical technologies and infrastructure.President Biden issued an executive order on screening outbound investment in sensitive technologies for countries of concern.The Inflation Reduction Act includes tax credits for EVs,contingent on a phaseout of Ch

143、inese rare earth minerals from EV batteries.Industrial policy subsidies are available for semiconductor manufacturing in the United States with strings attached,since recipients cannot expand chip production capacity by more than 10%over the next ten years in countries of concern like China.All the

144、while,the 2018 trade war tariffs largely remain in place.U.S.Export Controls from Trump to BidenBoth the Trump and Biden administrations have attached great importance to preventing technology leaks that could harm national security amid a sharp deterioration in the geopolitical environment.But ther

145、e are important differences in strategy and implementation.The winds of change were evident with the 2018 Export Control Reform Act,which mandated that emerging and foundational technologies essential to national security be subject to export controls.This revision 5 Joe Leahy et al.,“Dare to Fight:

146、Xi Jinping Unveils Chinas New World Order,”Financial Times,March 31,2023,https:/ SPECIAL REPORT u MARCH 2024broke new ground by incorporating technologies that are ubiquitous in economic activities.6 It was largely informed by competition with China,since the Bureau of Industry and Securitys subsequ

147、ent list of covered technologies mirrored the sectors targeted in Made in China 2025.The Trump administration used the Entity List to punish sanctions infringement and address vulnerabilities in critical infrastructure posed by Chinese technology firms.ZTEs violation of its settlement with the U.S.g

148、overnment following proscribed sales of telecommunications equipment to Iran resulted in swift export restrictions in spring 2018 that threatened its financial solvency.President Donald Trump,however,intervened to ease the controls at the behest of President Xi Jinping.7 Concerned over the national

149、security risks of Huaweis 5G networks,the Trump administration banned the company from U.S.infrastructure and placed it on the Entity List in May 2019.U.S.companies were henceforth required to obtain a license(with the presumption of denial)to sell chips to Huawei and 68 of its affiliates.A year lat

150、er,the rule was amended to close a loophole extending the export restrictions to foreign firms that rely on U.S.technology or equipment.The novel use of the Foreign Direct Product Rule vastly extended the reach of U.S.technology restrictions.For instance,Taiwan-based TSMC curtailed its sales to Huaw

151、ei and other Chinese companies on the Entity List.These long-arm controls were a heavy blow to the giant Chinese telecommunications firm.8When the Biden administration took over in 2021,some important lessons had been learned.First,Chinas dependence on high-performance chips was recognized as a key

152、weakness in its ambitions to lead in advanced manufacturing and develop cutting-edge weaponry.Second,the inconsistent implementation of the export controls(as a result of President Trumps political interventions)blunted U.S.policy objectives.And third,export controls that applied only to U.S.compani

153、es would enable China to find workarounds to the disadvantage of these firms.Important decisions loomed regarding the feasibility and tradeoffs of extraterritorial applications and plurilateral arrangements.But the Biden administration went beyond tinkering with existing export control policies to o

154、ffer a new set of objectives and far more comprehensive strictures on chip exports.In a landmark speech in September 2022,National Security Advisor Jake Sullivan spoke of the new challenges of protecting force-multiplier technologiesmicroelectronics,edge computing,AI,biotechnology,and clean energyin

155、 a transformed security environment.9 The old approach of maintaining relative advantage over China,Sullivan admonished,would no longer satisfy U.S.national security objectives.Instead,stalling Chinese development in sensitive sectors was deemed necessary.This reassessment by the Biden administratio

156、n was informed in large part by Chinas military-civil fusion practices,which make it hard to forestall the diversion of advanced commercial technologies to sophisticated weapons programs.Mounting geopolitical challenges have also influenced the Biden administration.Noting the successful experience o

157、f technology sanctions on Russia,Sullivan remarked that“technology export controls can be more than just a 6 Elena Lazarou and Nicholas Lokker,“United States:Export Control Reform Act(ECRA),”European Parliamentary Research Service,EPRS Report,November 2019,https:/www.europarl.europa.eu/cmsdata/21052

158、3/EPRS_BRI(2019)644187_EN.pdf.7 Gregory C.Allen,“Chinas New Strategy for Waging the Microchip Tech War,”Center for Strategic and International Studies(CSIS),May 3,2023,https:/www.csis.org/analysis/chinas-new-strategy-waging-microchip-tech-war.8 Paul Triolo and Kevin Allison,“The Geopolitics of Semic

159、onductors,”Eurasia Group,September 10,2020,https:/ Jake Sullivan,“Remarks by National Security Advisor Jake Sullivan at the Special Competitive Studies Project Global Emerging Technologies Summit,”White House,September 16,2022,https:/www.whitehouse.gov/briefing-room/speeches-remarks/2022/09/16/remar

160、ks-by-national-security-advisor-jake-sullivan-at-the-special-competitive-studies-project-global-emerging-technologies-summit.15EXPORT CONTROLS u SOLS preventative tool.If implemented in a way that is robust,durable,and comprehensive,they can be a new strategic asset in the U.S.and allied toolkit to

161、impose costs on adversaries,and even over time degrade their battlefield capabilities.”10The October 7,2022,export control rules were an important step in the implementation of these new strategic goals.Their basic thrust is to curtail Chinas access to the high-performance chips needed to train AI m

162、odels and develop supercomputers.The rules are complex,but,in broad strokes,they include barring the sale of certain advanced computing chips;restricting the supply of semiconductor production equipment used to manufacture logic semiconductors below 16nm or 14nm,DRAM chips at or below 18nm,and NAND

163、flash memory chips with 128 or more layers(for U.S.firms as well as foreign companies that use U.S.technology or equipment);and forbidding U.S.persons from assisting with advanced logic manufacturing in China.11 These controls seek to frustrate Chinas technological advancement by curtailing its acce

164、ss to chips,machinery,and talent.This was a bold and unilateral move by the United States,and one that carried huge repercussions for its allies and partners.The long-arm controls on chip and equipment sales hinder the ability of companies headquartered in partner countries to serve the Chinese mark

165、et via exports or local production.Equally important has been the U.S.effort to plurilateralize these restrictions to increase their effectiveness.Allied export control diplomacy acquired new urgency.Export Control Coordination:What Role for South Korea?The challenges of export control coordination

166、are steep.Gaps in threat perception over the risks posed by Chinas technological deepening,different competitive niches within the vast semiconductor supply chain,asymmetrical vulnerabilities to potential Chinese retaliation,and dissimilar legal regimes governing the export of sensitive technologies

167、 and products can be daunting barriers limiting the degree of coordination,even among allied countries.Another complicating factor is that export control policies are a moving target.By necessity,adjustments will be needed to factor in technological innovationsincluding Chinas indigenous technologic

168、al progressand to close loopholes in extant regulations.These headwinds notwithstanding,the United States was able to reach an agreement with the Netherlands and Japan a few months after the October 7,2022,controls were put in place.This understanding addressed two major U.S.concerns:that Dutch and

169、Japanese firms would not export to China the highly advanced lithography equipment they alone dominate,and that they would not retool operations to provide other advanced semiconductor equipment that U.S.firms were forbidden to supply to China after October 2022.12 This agreement was quietly worked

170、out behind the scenes,with each government adjusting its regulations in the spring and summer of 2023.The Dutch government announced export controls that went beyond extreme ultraviolet lithography to include some deep ultraviolet lithography equipment.13 In the case of Japan,23 new categories of se

171、miconductor production equipment were added to the list of 10 Sullivan,“Remarks by National Security Advisor Jake Sullivan.”11 Martijn Rasser and Kevin Wolf,“The Right Time for Chip Export Controls,”Lawfare,December 13,2022,https:/www.lawfaremedia.org/article/right-time-chip-export-controls.12 Grego

172、ry C.Allen and Emily Benson,“Clues to the U.S.-Dutch-Japanese Semiconductor Export Controls Deal Are Hiding in Plain Sight,”CSIS,March 1,2023,https:/www.csis.org/analysis/clues-us-dutch-japanese-semiconductor-export-controls-deal-are-hiding-plain-sight.13 Rem Korteweg,“Dutch Perspective:How the Neth

173、erlands Followed Washingtons October 7 Export Restrictions,”in“The PostOctober 7 World:International Perspectives on Semiconductors and Geopolitics,”ed.Gregory C.Allen,CSIS,September 28,2023,30,https:/www.csis.org/analysis/post-october-7-world.16NBR SPECIAL REPORT u MARCH 2024controlled items.The ne

174、w Japanese export control policies are China-agnostic,as they do not target any specific country.In practice,however,Japan will apply them with a presumption of denial toward Chinese entities.14 China responded to these measures by restricting exports of the critical minerals germanium and gallium,t

175、hus demonstrating its leverage over other critical nodes of the supply chain.No similar deal to align export control policies has been reached with Seoul.South Korea is a global leader in the production of memory chips and possesses a small but highly sophisticated semiconductor equipment sector,wit

176、h a global market share of 73%in DRAM and 51%in NAND flash.The stakes of great-power competition in semiconductor manufacturing could not be higher for the South Korean economy,as chips capture the largest share of the countrys exports,at almost 19%in 2022.15 But South Korea has a distinct form of e

177、xposure in the chip war compared with the Netherlands or Japannamely,the large China-based fab operations of leading chip producers Samsung Electronics and SK Hynix.Around 40%of these two companies memory chips are produced in China.16 When the United States rolled out the October 2022 rules,it prov

178、ided a temporary reprieve,allowing South Korean firms to continue importing needed equipment to support their China-based fabs at existing performance levels.South Korean firms have been contending with an unpredictable environment and difficult options given the sunk costs of their large fab operat

179、ions in China.Relying on a temporary waiver in U.S.export controls for the supply of chip equipment created uncertainty about the long-term future of these plants.The inability to upgrade their existing manufacturing operations will also render them less valuable over time.17 Chinas plans to boost i

180、ts domestic champions in the memory chip segment and the increasing use of national security controls in market operations among key semiconductor-producing countries have created a host of additional competitive pressures and risks.Heading into the one-year anniversary of the October 2022 rules,the

181、 U.S.Department of Commerce on October 17,2023,announced upgrades geared toward closing loopholes by changing the criteria used to evaluate chip performance based on total processing performance and performance density rather than speed of interconnection.This was spurred by Nvidias move to evade th

182、e original export control rule by redesigning its chips to continue selling to Chinese customers.For that reason,U.S.authorities imposed a notification requirement for the export of certain chips below the restricted performance threshold,which may nevertheless be subjected to licensing.18 The updat

183、ed export control rules also greatly expanded the geographic reach of the restrictions.In an effort to prevent transshipment through third countries to Chinese affiliates,the list of countries subject to licensing requirements grew by 43.19 14 Kazuto Suzuki,“Japanese Perspective:Japan Embraces Its S

184、trategic Indispensability in Alliance with the United States,”in Allen,“The PostOctober 7 World,”22.15 U.S.International Trade Administration,“South Korea Semiconductors,”https:/www.trade.gov/market-intelligence/south-korea-semiconductors.16 Martin Chorzempa,“How U.S.Chip Controls on China Benefit a

185、nd Cost Korean Firms,”Peterson Institute for International Economics,Policy Brief,July 2023,https:/ Wonho Yeon,“South Korean Perspective:South Korea Needs Increased(but Quiet)Export Control Coordination with the United States,”in Allen,“The PostOctober 7 World.”18“Commerce Strengthens Restrictions o

186、n Advanced Computing Semiconductors,Semiconductor Manufacturing Equipment,and Supercomputing Items to Countries of Concern,”U.S.Department of Commerce,Bureau of Industry and Security,Press Release,October 17,2023,https:/www.bis.doc.gov/index.php/documents/about-bis/newsroom/press-releases/3355-2023-

187、10-17-bis-press-release-acs-and-sme-rules-final-js/file.19 Emily Benson,“Updated October 7 Semiconductor Export Controls,”CSIS,October 18,2023,https:/www.csis.org/analysis/updated-october-7-semiconductor-export-controls;and William Alan Reinsch,Matthew Schleich,and Thibault Denamiel,“Insight into th

188、e U.S.Semiconductor Export Controls Update,”CSIS,October 20,2023,https:/www.csis.org/analysis/insight-us-semiconductor-export-controls-update.17EXPORT CONTROLS u SOLS A significant step in U.S.-ROK coordination on export controls was the U.S.Commerce Departments recognition in mid-October 2023 of Sa

189、msung Electronics and SK Hynix manufacturing operations in China as validated end users.With this designation,it will be possible to ship approved semiconductor equipment with a general license in lieu of repeated individual licenses.20 This move was very much welcomed in South Korea.It does not,how

190、ever,fully eliminate uncertainty about the future of ROK chip manufacturing in China.There are still constraints on the types of semiconductor equipment that can be shipped,which will hinder the technological upgrading of these plants and minimize the expansion of productive capacity in China.String

191、s also still apply regarding the extent that South Korean firms can accept subsidies for their U.S.investments,which could reduce the incentive to pursue this strategy.At this juncture,the U.S.-ROK dialogue has centered on damage control(i.e.,easing the immediate fallout of the October 7 export rule

192、s).However,a broader movement to realign export control regimes,similar to the deals with the Netherlands and Japan,has not materialized.The Biden and Yoon administrations have made strides in deepening the alliance by taking on the new challenge of economic security.Much is at stake in their abilit

193、y to lead in emerging technologies,nurture the critical semiconductor industry,and prevent the leakage of sensitive knowledge and intellectual property.Despite recent efforts,robust export control coordination in the era of strategic competition is still a work in progress in the U.S.-ROK relationsh

194、ip.20“Commerce Issues Rule to Strengthen National Security Partnership to Secure Semiconductor Supply Chains with Republic of Korea.”18NBR SPECIAL REPORT u MARCH 2024The Impact of Export Controls on South Korean Companies and Pathways to Plurilateral Cooperation21Jungmin Pak,Hyunsoo Joo,and Haeyoon

195、ChungIn recent years,the global semiconductor industry has witnessed a substantial transformation driven primarily by the implementation of U.S.semiconductor export control policies under the U.S.Export Administration Regulations(EAR),which seek to limit Chinas access to cutting-edge technology.Thes

196、e export controls have typically applied to items that are located in the United States,are of U.S.origin,contain substantial U.S.-origin controlled content,or are the foreign-produced direct product of certain U.S.software or technology,known as the Foreign Direct Product(FDP)Rule.Historically,Sout

197、h Korean businesses have not experienced a disproportionately high level of exposure to the U.S.EAR compared with other countries.This can be attributed to their limited reliance on controlled items.However,the situation has taken a distinct turn as more items have become subject to the FDP Rule in

198、recent years,greatly augmenting their role.When focusing on the semiconductor manufacturing sector,the EAR,in particular by virtue of the FDP Rule,has become especially relevant with regard to recent U.S.export controls on semiconductor products destined for China.A Brief Overview of U.S.Semiconduct

199、or Export Controls on ChinaOn October 7,2022,the U.S.Department of Commerce introduced new regulations prohibiting U.S.companies from exporting technology,software,and equipment essential for advanced computing and semiconductor production in China.These controls mandate that U.S.companies obtain li

200、censes if they intend to sell such equipment or technology to Chinese companies.The rules also require exporters,re-exporters,and transferors to obtain a license to ship an extensive range of electronics and computer-related items to Chinaor,in some cases,any item subject to the EARwhen they are des

201、tined for supercomputing end uses or for use in semiconductor fabrication facilities that manufacture chips that meet certain performance parameters.22 Other sections of the new rule are aimed at preventing the sale of specific U.S.semiconductor manufacturing equipment to China without a license,the

202、 development or production of semiconductor manufacturing equipment within China,the manufacture of certain chips designed in China at fabs outside China,and the provision of support by U.S.persons with respect to items not subject to the EAR in the development or production of specific types of int

203、egrated circuits in China.Although allied nations had not made prior commitments to enforce similar restrictions,this announcement marked a significant expansion of export controls.Implicitly,it had the effect of pressuring U.S.allies to align diplomatically and politically with these new restrictio

204、ns.Securing support from allies was considered crucial for the success of this policy.23 In January 2023,both Japan and the Netherlands agreed in principle to join the United States in imposing semiconductor 21 This section is authored by Jungmin Pak,Hyunsoo Joo,and Haeyoon Chung,who are attorneys a

205、t Lee&Kos international practice trade group.They can be reached at,and.22“Supercomputer,Advanced-Node Integrated Circuits,and Semiconductor Manufacturing Equipment End Use Controls,”Code of Federal Regulations,15 CFR 744.23,https:/www.ecfr.gov/current/title-15/subtitle-B/chapter-VII/subchapter-C/pa

206、rt-744/section-744.23.23 Stephen Nellis,Karen Freifeld,and Alexandra Alper,“U.S.Aims to Hobble Chinas Chip Industry with Sweeping New Export Rules,”Reuters,October 10,2022,https:/ CONTROLS u PAK,JOO,AND CHUNGexport controls.24 By July 2023,Japan had escalated its measures by including cutting-edge m

207、anufacturing equipment required for producing high-end chips.However,companies like South Koreas Samsung Electronics and SK Hynix and Taiwans TSMC,which already had operations in China,received a one-year waiver,initially set to expire in October 2023.Although the waiver was extended,uncertainties s

208、till loomed in the industry regarding the duration of the extension.25 Just as the one-year waiver was nearing its expiration,the United States designated semiconductor plants of Samsung Electronics and SK Hynix in China as validated end users,a status that significantly reduces the licensing burden

209、 on South Korean firms with operations in China.26 Impacts on and Challenges for the ROK Semiconductor IndustryThe ROK semiconductor industry faces a unique and disproportionate impact from U.S.export controls,primarily due to its substantial investments in manufacturing facilities located within Ch

210、ina.The two largest South Korean semiconductor manufacturers,Samsung Electronics and SK Hynix,have established manufacturing facilities in China,and China is a major buyer of NAND flash and DRAM components that are produced by them.Samsung Electronics produces approximately 40%of its NAND flash chip

211、s at its Xian plant,while SK Hynix manufactures around 40%of its DRAM chips in Wuxi and 20%of its NAND flash chips in Dalian.27 In total,Samsung Electronics and SK Hynix have invested over$28 billion and$29 billion,respectively,in establishing semiconductor manufacturing facilities in China.These su

212、bstantial investments underscore their significant presence in the Chinese semiconductor landscape,creating a notable impact compared with competitors in other countries,such as Japan.This is due to the ROK semiconductor industrys heavy reliance on both China and the United States as key export dest

213、inations.For context,according to the Bank of Koreas latest economic outlook report,South Koreas semiconductor exports over the past decade have exhibited 1.9 times as much volatility as Taiwans and 2.7 times as much as Japans in terms of value.28 Until Samsung Electronics and SK Hynix were designat

214、ed as validated end users,uncertainty persisted regarding when,for how long,and how frequently these waivers would be renewed for a market on which the South Korean semiconductor industry relied heavily.In 2022,South Korea shipped 55%of all its semiconductor exports to China,followed by 12%to Vietna

215、m,9%to Taiwan,and 7%to the United States.29 By contrast,South Koreas biggest chip export rival,Taiwan,ships a more balanced mix of chip products to more countries,which protects it from volatile market conditions.This dependence has left South Korean products disproportionately vulnerable to U.S.sem

216、iconductor export controls targeting China.In addition to these overarching challenges,South Korean semiconductor manufacturers have encountered complex issues stemming from U.S.export controls,with effects that extend beyond 24 Matthew Townsend et al.,“The Netherlands Joins the U.S.in Restricting S

217、emiconductor Exports to China,”Allen and Overy,March 13,2023,https:/ Jasmine Choi,“Samsung,SK Breathe Sigh of Relief as U.S.Postpones China Semiconductor Export Controls,”Business Korea,August 24,2023,https:/www.businesskorea.co.kr/news/articleView.html?idxno=200254.26 Jasmine Choi,“U.S.Approves VEU

218、 Status for Samsung,SK Hynix,Reflecting Solid U.S.South Korea Alliance,”Business Korea,October 18,2023,https:/www.businesskorea.co.kr/news/articleView.html?idxno=203677.27 Karen Freifeld,Chris Sanders,and Alexandra Alper,“U.S.Allows Samsung,SK Hynix to Keep Getting U.S.Tools in China,”Reuters,Octobe

219、r 13,2023,https:/ Jin-Gyu Kang,“S.Korean Chips Heavy Reliance on China,U.S.Poses Risk to National Economy,”Korea Economic Daily,May 29,2023,https:/ Ibid.20NBR SPECIAL REPORT u MARCH 2024the scope of the controls themselves.Washington has been stringent in curbing investments in China,which has in tu

220、rn triggered countermeasures from Beijing.One example of these countermeasures has been Chinas partial ban on the sale of products from Micron,the largest memory semiconductor company in the United States.In response,the United States has requested that South Korean companies refrain from filling th

221、e vacancy in the Chinese market.This dynamic has placed them in a difficult position.Compliance with the request has proved to be a complex endeavor because there are numerous purchase orders from distributors,often with the ultimate end users being Chinese companies.Moreover,the situation has raise

222、d concerns about potential antitrust and cartel-related consequences.It could be perceived as a case of multiple companies within the semiconductor industry cooperating to limit or control the supply of a product to China,which in turn diminishes competition within the industry.Moreover,there is a g

223、rowing concern that the United States might use its discretionary authority in granting exemptions as leverage to compel South Korean companies to align with this request,intensifying the complexity and uncertainty of their operational landscape.These challenges shed light on the broader issues enco

224、untered by South Korean semiconductor manufacturers,which face the often erratic and unpredictable application of export controls.This situation is compounded by the absence of consistent long-term policies,which can hinder long-term strategic planning.Semiconductor companies must make substantial i

225、nvestments in research,development,and manufacturing equipment,often requiring extended lead times.Thus,instability in policy can deter companies from committing to certain ventures or investments,potentially affecting their competitive positioning and technological advancement.There is a perception

226、 among industry stakeholders that certain policies might be influenced by political considerations.Such influence introduces an additional layer of unpredictability into the semiconductor industry,altering market dynamics and forcing South Korean manufacturers to adjust their strategies rapidly.Howe

227、ver,this landscape is continually evolving.Most recently,substantial pushback on restrictions affecting South Korean semiconductor manufacturers with operations in China and exports to China has led to increased U.S.-ROK bilateral discussions,including through forums such as the United StatesKorea S

228、upply Chain and Commercial Dialogue and the Export Control Working Group.As a result of these discussions,on October 17,2023,Samsung Electronics and SK Hynix were designated as validated end users and secured a waiver that allows them to indefinitely supply U.S.chip equipment to their facilities in

229、China without the need for separate licenses.30 This designation substantially eases their regulatory burden,affording South Korean companies much-needed relief,mitigating concerns within the industry,and establishing a more stable and predictable operational framework.Broader Implications for the G

230、lobal Semiconductor IndustryThe U.S.export controls constrain and isolate Chinas semiconductor industry for reasons of economic and national security.The United States is actively encouraging other semiconductor powerhouses besides South Korea,such as Japan,Taiwan,and the Netherlands,to participate

231、in these measures,signaling its intention to create a united allied front.30 Choi,“U.S.Approves VEU Status for Samsung,SK Hynix,Reflecting Solid U.S.South Korea Alliance.”21EXPORT CONTROLS u PAK,JOO,AND CHUNGHowever,the implementation of these export control policies,while potentially effective in t

232、he short term,carries with it significant long-term consequences.For example,Nvidias CFO Colette Kress has highlighted that restrictions prohibiting the sale of data center GPUs to China could lead to a permanent loss of opportunities for the U.S.semiconductor industry to compete and thrive in one o

233、f the worlds largest markets.This concern underscores the importance of carefully considering the ramifications of export control policies for the future of the semiconductor industry.31 The unilateral imposition of such restrictions is also expected to result in deteriorating financial performance

234、for the semiconductor companies of U.S.allies because China,being a substantial importing market,will inevitably face challenges that could adversely affect the global semiconductor landscape in the medium to long term.China has sought to become self-reliant in the production of semiconductors,while

235、 the United States has sought to block Chinas advancements and return parts of the semiconductor supply chain to the United States.The CHIPS and Science Act has introduced an additional layer of complexity.In March 2023 the U.S.Department of Commerce proposed rules to prevent China and other countri

236、es of concern from tapping the$52 billion of funds earmarked for semiconductor manufacturing and research under the legislation.32 Under the subsidy program,semiconductor manufacturers receiving funding are compelled to restrict their production capacity for advanced semiconductors in China,limiting

237、 the increase to 5%over the next ten years.For older-generation general-purpose chips,this increase is capped at 10%.Exceeding these limits requires repayment of the full subsidy,effectively prohibiting additional investment and limiting firms to maintaining current production levels.Samsung Electro

238、nics and SK Hynix fall under the category of companies manufacturing advanced semiconductors.If they were to receive U.S.government subsidies,these limitations would significantly constrain their operations.The former ROK minister of trade,industry,and energy,Lee Chang-yang,voiced concerns.He mentio

239、ned that the ROK government and the semiconductor industry“are concerned about the conditions attached to the Act.”He explained that“given the high investment costs,investing in the United States is becoming less appealing,”and“such conditions have increased uncertainty for Korean chipmakers and are

240、 feared to infringe upon Korean companies business rights.”33Samsung Electronics and SK Hynix have also submitted statements in response to the CHIPS Act.Notably,the statements included the necessity for clear terms and definitions concerning clauses related to“material expansion”and“technology claw

241、back”to ensure that investments in the U.S.semiconductor manufacturing sector are not inadvertently or unfairly restricted.34 The statement also pointed out that essential research efforts that drive advancements in semiconductor manufacturing often rely on international collaboration.The Korea Semi

242、conductor Industry Association(KSIA)has expressed concerns about the impact on joint research and collaboration conducted with countries of concern before receiving subsidies under the CHIPS Act.Additionally,KSIA highlighted potential disruptions to routine business operations that could result from

243、 restrictions on patent usage agreements and requested that such agreements be 31 Arjun Kharpal,“Nvidia Warns More Semiconductor Curbs Will End U.S.Chipmakers Ability to Compete in China,”CNBC,August 24,2023,https:/ Soo-Hyang Choi,“South Korea Asks U.S.to Review China Rule for Chip Subsidies,”Reuter

244、s,May 23,2023,https:/ So-Hyeon Kim,“Concerned about CHIPS Act,Korea Says U.S.Investment Less Attractive,”Korea Economic Daily,March 6,2023,https:/ Jo He-rim,“S.Korea Asks U.S.to Give More Leeway on Chip Expansion in China,”Korea Herald,May 24,2023,https:/ SPECIAL REPORT u MARCH 2024excluded from the

245、“technology transfer”clause under“joint research.”Furthermore,it proposed a narrower definition of“foreign entities of concern”to specifically include companies listed on export control lists.35These challenges are not confined to industry giants like Samsung Electronics and SK Hynix.South Korea hos

246、ts a robust fabless sector that faces similar issues.The extensive reach of the FDP Rule now compels fabless companies to provide end-user statements or certificates to U.S.exporters,subjecting them to more extensive restrictions.Consequently,these limitations extend beyond what is explicitly prohib

247、ited by the EAR,affecting companies operations in China.ConclusionGovernments can have a significant impact on businesses through policies,regulations,and other means,which often impose burdensome restrictions and bureaucratic hurdles that hinder corporate activities.Recent developments in the globa

248、l semiconductor industry,shaped by U.S.export controls and their repercussions,serve as an example of how governmental decisions can reshape the landscape for key players in an industry.Looking ahead,it is crucial that the United States consider the broader implications of its actions when seeking c

249、ooperation from partners and allies in the semiconductor industry to minimize the damage to their interests.Navigating this landscape will require more careful consideration and adaptation to the dynamics of the global semiconductor industry.South Koreas export control regime comprises(1)controls on

250、 strategic items,aligning with those in multilateral export control regimes,without any unilaterally controlled items,and(2)catch-all controls to align with its key allies such as the United States.The catch-all controls require license for export of a certain nonstrategic item to a certain country

251、or to an individual or entity of concern,or in instances where any red flags arise.South Korea has historically utilized and updated its catch-all controls to coordinate its export controls with key allies.For example,it updated the list of nonstrategic items subject to license requirements if desti

252、ned to Russia to coordinate export controls against Russia with the United States after the Russian invasion of Ukraine.South Korea has also aligned its export control measures with those of the United States by regularly updating the list of concerned entities to reflect the U.S.Entity List,thereby

253、 subjecting them to South Koreas catch-all control measures.South Koreas controls on semiconductor and related technologies and equipment focus on(1)strategic items under multilateral export control regimes or(2)broader semiconductor-related items if destined to Russia under catch-all controls.Conse

254、quently,many semiconductor-related items destined to China currently fall outside South Koreas export controls.Like other allied nations,such as Japan and the Netherlands,South Korea is considering adopting controls on the export of certain semiconductors to China,depending on various factors such a

255、s its companies presence in the Chinese market or reliance on the U.S.technologies,as well as diplomatic relations with China,which are far more complicated than those with Russia.Once adopted,to the extent these controls overlap with the scope of U.S.export controls,this approach could simplify com

256、pliance for South Korean companies.By adhering to ROK regulations,these companies would simultaneously meet U.S.requirements,effectively reducing their compliance burden and risk in the semiconductor sector.However,this also implies limited business opportunities for South 35 Kim Yoo-jin,“South Kore

257、a Demands Relaxation of the U.S.Semiconductor Subsidy Requirements,”Kyunghyang Shinmun,May 24,2023,https:/m.khan.co.kr/world/america/article/202305240646001#c2b.23EXPORT CONTROLS u PAK,JOO,AND CHUNGKorean companies with China,in terms of market or manufacturing place,which could cause them to reques

258、t government subsidies or other forms of support to compensate them for such loss.An additional consideration is the prospect of the United States and South Korea working together on export controls.In this collaborative approach,South Korea would independently enforce export controls on items of cr

259、itical U.S.concern for export to China.Such a strategy would not only shield South Korea from the far-reaching implications of the FDP Rule but also align with U.S.objectives.While the range of items subject to control in this approach may be narrower than under the comprehensive FDP Rule,South Kore

260、a would gain the ability to exercise effective regulation over specific items.This approach carries several benefits,including clearer criteria when compared with the cumbersome compliance requirements.Further,a precedent was set when South Korea successfully navigated the United States blanket appl

261、ication of the FDP Rule to secure an exemption during the onset of the Russian invasion of Ukraine.36 Such coordinated and effective enforcement would not have been feasible without South Koreas independent export control regulations,nor would relying solely on the United States extended FDP rule ha

262、ve yielded the same positive outcomes.In light of these considerations,it is crucial for the United States and South Korea to consider implementing a genuinely cooperative framework for export controls concerning China.This collaboration should extend beyond the ROK merely aligning with the United S

263、tates and following its directives,as has often been the case in the past.The extraterritorial application of U.S.export control regulations,such as the FDP Rule,could be limited or exempt for countries that actively engage in this cooperative approach with the United States to ensure true collabora

264、tion.This strategy offers a pragmatic and forward-looking path in the complex and ever-evolving realm of international semiconductor trade,fostering regulatory predictability and industry stability.36 Oh Seok-min,“(4th LD)S.Korea Wins Exemption from U.S.Foreign Direct Product Rule Regarding Exports

265、to Russia,”Yonhap,March 4,2022,https:/en.yna.co.kr/view/AEN20220304001254320.24NBR SPECIAL REPORT u MARCH 2024Policy Options to Increase U.S.-ROK Export Control CooperationMireya Sols and Jungmin PakGiven the preceding analyses of U.S.and South Korean export control policies in an era of strategic c

266、ompetition with China and rapid technological development,the United States and ROK should consider the following policy options to maximize the effectiveness of each countrys export control policies and ensure adequate coordination among them.Ensure a“small yard/high fence approach.”The Biden admin

267、istrations goal of maintaining targeted and narrow restrictions on the export of sensitive technologies that can be diverted to advanced weaponry development is important in order to balance national security interests with the preservation of dynamic innovation ecosystems.In practice,however,implem

268、enting this restrained approach is challenging for several reasons.The identified force-multiplier technologiesAI,microelectronics,supercomputing,biotechnology,and clean energyare present in scores of economic sectors.Restricting their dissemination will have wide-ranging effects.Moreover,as the 202

269、3 upgrade to the October 7,2022,rule demonstrated,the emphasis on closing loopholes to ensure the effectiveness of the restrictions makes the yard bigger and the fence higher.For these reasons,the United States and South Korea,in the development of their individual and coordinated export controls,mi

270、ght make use of periodic reviews to delist technologies and products that have reached maturity or for which restricted access no longer serves a national security goal.Ameliorate gaps in threat perception.As the United States has referenced Chinas military-civil fusion to justify export control res

271、trictions on technologies widely available for commercial use,it will be important to improve channels of communication and information sharing between the United States,South Korea,and other partners to close gaps in threat perception on the risks of technology dissemination in sensitive areas.The

272、U.S.-ROK Next Generation Critical and Emerging Technologies Dialogue,which held its inaugural meeting in December 2023,holds promise in facilitating information exchange.Because emerging technologies are advancing rapidly and Chinas military buildup is nontransparent,a better understanding of how Ch

273、inese technology acquisition and development practices pose national security risks will provide a more solid ground on which to build a joint approach to export controls.Build resilience to shared and asymmetrical vulnerabilities to Chinese retaliation.One of the risks of tightening the outflow of

274、advanced technology is Chinese retaliation.While China is still incapable of indigenously manufacturing advanced chips,it controls other chokepoints in the supply chainmost notably key critical mineralsand possesses levers of economic coercion.Chinese countermeasures to date include tightened export

275、 controls on germanium,gallium,and graphite and the banning of U.S.firm Micron from its government procurement programs.Unreliable supply or higher prices for critical mineral inputs negatively affect both South Korea and the United States.In sanctioning Micron,Beijing sought to create a potential r

276、ift between the allies on the issue of backfilling.Geographic proximity,greater dependence on Chinese demand,and the sunk costs of large fab operations in China result in greater risk exposure for South Korea than for the United States.Therefore,the two allies should develop supply chain resilience

277、and anti-coercion instruments that take into account both shared and asymmetrical vulnerabilities.To this end,it will be important to develop supply chain early-warning systems,mutual assistance 25EXPORT CONTROLS u SOLS AND PAKprograms to respond to economic coercion,support for the development of a

278、lternative sources for critical minerals,and diversification efforts to reduce overdependence on China.Ensure good coordination across economic security policy instruments.Export controls do not operate in a vacuum.They are part of broader economic security toolkits that are also undergoing steep ch

279、ange.Taking advantage of the bilateral economic security dialogue established by the United States and South Korea,it will be important to evaluate the impact of export control policies as they interact with other ongoing initiatives,such as investment screening,technology standard setting,cybersecu

280、rity measures,industrial policies,and anti-coercion instruments.The annual U.S.-ROK Senior Economic Dialogue provides a good platform for such evaluation and coordination.Maximize the effectiveness of export control policy by building a plurilateral framework.Due to deepening geopolitical divides,cu

281、rrent multilateral export control regimes will not be nimble enough to meet the challenges of the moment.Unilateral export controls are ineffective and costly,and bilateral coordination is insufficient,given the important role of third parties in the vast and complex semiconductor supply chain.South

282、 Korea and the United States might work with like-minded countries,such as Japan,the Netherlands,Taiwan,and Germany,to build a robust plurilateral regime on export controls by using bilateral and trilateral(with Japan)mechanisms as stepping stones.A plurilateral export control regime will be more ef

283、fective and efficient.Ensure Export Control Classification Number(ECCN)consistency across agencies such as the U.S.Department of Commerces Bureau of Industry and Security(BIS)and the Korea Strategic Trade Institute(KOSTI).Discrepancies among jurisdictions in the assignation of ECCNs create confusion

284、 and reduce the effectiveness of export control enforcement.Joint efforts might be made to ensure consistency of classification for controlled items.To facilitate this process,BIS and KOSTI could form a consultative working group comprising relevant officers for the purpose of comparing classificati

285、on numbers and developing processes for resolving any inconsistencies that arise.This could be achieved by reclassifying inconsistent controlled item ECCNs to align across countries.In cases where that is not possible,both organizations could disclose these differences to the public through their we

286、bsites so that companies can more easily ensure that they are in compliance when trading those items.Increase information sharing on export control violations and enforcement actions.Common practices exist to avoid or circumvent export controls across jurisdictionsfor example,through Harmonized Syst

287、em Code laundering.U.S.and ROK agencies should establish better processes for sharing information on export control violations,including details on how the circumvention attempts were carried out as well as the corresponding enforcement measures taken in response.This information sharing could simil

288、arly be led by a BIS-KOSTI consultative working group and would help ensure the effective implementation and enforcement of export controls.Sharing this information with the publicto the extent possible without undermining enforcementwould provide further deterrence by highlighting the consequences

289、of failure to comply with regulations.27the national bureau of asian researchnbr special report#107|march 2024Pathways for U.S.-ROK Collaboration on Artificial IntelligenceAhram Moon and Cole McFaulEXECUTIVE SUMMARYThis chapter examines the U.S.and South Korean approaches to the development and gove

290、rnance of artificial intelligence(AI)and proposes pathways to greater cooperation on advancing shared values in AI.MAIN ARGUMENT With AI poised to affect both domestic and global economic and security environments,governments around the world have been working to develop policy approaches to balance

291、 the opportunities and risks arising from the technologys increasingly broad utilization.The U.S.and the Republic of Korea(ROK)have both adopted foundational AI policy frameworks,and both countries are well-positioned as advanced technology powers to play leading roles in shaping global AI governanc

292、e.In the first section of this chapter,Ahram Moon provides insight into South Koreas AI industry,highlighting the governments endeavors to foster innovation and ensure trustworthy AI.She then argues for U.S.-ROK cooperation to effectively tackle AI risks and address challenges stemming from potentia

293、l overconcentration.In the second section,Cole McFaul highlights recent policy developments in the U.S.approach to AI governance and examines the state of U.S.-ROK research collaboration.Noting that the U.S.has thus far been cautious to avoid imposing excessive regulations on the AI sector,he emphas

294、izes the need for global cooperation among like-minded countries to find common policy approaches.Given the shared interests and values of the U.S.and South Korea,he concludes that there is a significant opportunity for the two countries to play a leading role in establishing global AI norms and fra

295、meworks.POLICY IMPLICATIONS Given the significant risks as well as opportunities arising from AI,it is imperative that in addition to fostering AI development,related policies ensure trustworthy and ethical practices.As technology leaders with shared values,it is critical that the U.S.and South Kore

296、a work together to develop effective policies that can shape global discourse on AI governance.Heightened engagement across all levels of government and civil society will facilitate greater policy alignment among stakeholders in both countries.In addition to government-to-government dialogue mechan

297、isms,efforts should be made to increase business-to-business ties,joint research,and academic exchanges,which will foster closer cross-country cooperation in AI and ultimately facilitate the development of solutions to shared challenges.29ARTIFICIAL INTELLIGENCE u MOONT his chapter examines the U.S.

298、and South Korean approaches to the development and governance of artificial intelligence(AI)and proposes pathways to greater cooperation on advancing shared values in AI.With AI poised to affect both domestic and global economic and security environments,governments around the world have been workin

299、g to develop policy approaches to balance the opportunities and risks arising from the technologys increasingly broad utilization.The United States and the Republic of Korea(ROK)have both adopted foundational AI policy frameworks,and both countries are well-positioned as advanced technology powers t

300、o play leading roles in shaping global AI governance.In the first section of this chapter,Ahram Moon provides insight into South Koreas AI industry,highlighting the governments endeavors to foster innovation and ensure trustworthy AI.She then argues for U.S.-ROK cooperation to effectively tackle AI

301、risks and address challenges stemming from potential overconcentration.In the second section,Cole McFaul highlights recent policy developments in the U.S.approach to AI governance and examines the state of U.S.-ROK research collaboration.Noting that the U.S.has thus far been cautious to avoid imposi

302、ng excessive regulations on the AI sector,he emphasizes the need for global cooperation among like-minded countries to find common policy approaches.Given the shared interests and values of the United States and South Korea,he argues that there is a significant opportunity for the two countries to p

303、lay a leading role in establishing global AI norms and frameworks.The chapter concludes by considering policy options to strengthen U.S.-ROK collaboration on AI.ROK Policies for Innovation and Competitiveness in the Global AI Arena1Ahram MoonAs AI continues its rapid advance,including through develo

304、pments in generative AI,it is evolving into a more general-purpose technology.Alongside these developments,countries around the world are leveraging AI as an engine for economic growth and competing to establish policy frameworks that ensure its safe and responsible utilization.AI-driven innovations

305、,which require advanced computing power,large data sets,and cloud services,can be accelerated through collaborative efforts among stakeholders.The rapidly expanding impact of AI transcends national borders,geographic boundaries,and time zones.Single-country efforts to establish ethical practices and

306、 safety in AI have limitations,warranting the need for global cooperation.This section analyzes the status of the ROKs industrial ecosystem and policies,highlighting the necessity of increasing policy collaboration with the United States in the process of securing technological competitiveness and e

307、stablishing effective governance.To achieve this,the section analyzes the current state of the Korean industry within the AI value chain,encompassing computing power,data,models,and applications,and identifies potential weak links that hinder the ROKs competitiveness in the global AI market.Addition

308、ally,it examines the prominence of AI in South Koreas policies for the information and communications technology(ICT)industry and outlines recent efforts toward creating a legal framework aligned with global governance.1 This section is authored by Ahram Moon,who is a research fellow at the Korea In

309、formation Society Development Institute,where her work focuses on generating insights to formulate policies,fostering an environment for evidence-based policymaking(including AI ethics),assessing the impact of AI on the labor market,and participating in the Intelligent Information Society Panel Surv

310、ey.She can be reached at.30NBR SPECIAL REPORT u MARCH 2024Through this analysis,challenges and opportunities for collaboration between South Korea and the United States in the AI sector are explored.By leveraging high-quality data and computing power,AI has the potential to generate economies of sca

311、le and scope based on a single advanced model,enabling the development and release of numerous powerful applications.2 ChatGPT clearly demonstrates this potential.In 2019,OpenAI,benefiting from Microsoft Azures supercomputer infrastructure,began working to improve its GPT(generative pre-trained tran

312、sformer)large language model.In 2022,it unveiled ChatGPT,based on GPT3.5,demonstrating the economies of scale in AI technology.3 Subsequently,OpenAIs GPT was integrated into numerous applications,including Bing Chat in Microsofts Edge web browser and Copilot in Microsoft 365,demonstrating AIs abilit

313、y to achieve economies of scope as well.4 As AI emerges as a general-purpose technology across all industries,its extensive socioeconomic implications become increasingly evident.In this context,the drive to achieve economies of scale by a single entity or nation is inherently limited in its capacit

314、y to maximize benefits and mitigate risks.The dominance in AI of one actor,however influential,may not adequately address the diverse and complex challenges presented across various sectors.Therefore,the creation of mechanisms for reliable technological development,standards,norms,and governance req

315、uires transnational cooperation.Such collaboration is essential to steer the course of technological progress and ensure that the development and application of AI is equitable,ethical,and beneficial on a global scale.This approach underlines the necessity of collective efforts in shaping the future

316、 of AI,transcending national boundaries and interests.Now,thanks to advancements in machine learning such as deep learning and foundational models,AI has entered a phase where it serves as an enabler for other emerging digital technologies like blockchain and the metaverse.As with other new technolo

317、gies,however,AI also comes with its share of challenges.It functions as a predictive machine based on data and algorithms,bringing issues like data bias,privacy infringement,misinformation and disinformation,and labor displacement due to automation.In a hyperconnected society enabled by advanced net

318、works,the impact of AI transcends borders.Therefore,addressing its challenges will require international cooperation rather than the efforts of a single nation.The prevalence of these challenges could outweigh the benefits of AI,creating barriers to societal acceptance and reducing the technologys a

319、ctualization.In practice,governments worldwide have participated in supranational forums such as the G-20,the Organisation for Economic Co-operation and Development(OECD),and UNESCO,among others,to ensure the safety of successful AI development and deployment.As a result,a shared ethical framework,i

320、ncluding principles of respecting human dignity,autonomy,nondiscrimination,and privacy,has been embraced as a foundation for trustworthy AI.2 Ajay Agrawal,Joshua Gans,and Avi Goldfarb,eds.,The Economics of Artificial Intelligence:An Agenda(Chicago:University of Chicago Press,2019).3 Economies of sca

321、le refer to the phenomenon where larger operational sizes of firms result in production benefits.Economies of scale in AI arise as larger volumes of data enhance accuracy and learning capabilities.Increased computing power enables the operation of advanced AI models.Additionally,larger research team

322、s with substantial investments can innovate more effectively.This suggests that AI benefits larger organizations,offering them competitive advantages and greater opportunities for profit maximization.See Agrawal,Gans,and Goldfarb,The Economics of Artificial Intelligence.4 While economies of scale fo

323、cus on cost advantages achieved through increased production volume,economies of scope involve cost advantages from producing a variety of products or services within the same organization.Successful AI firms,such as Googles parent company Alphabet,leverage a variety of applications like search engi

324、nes,online video services,and autonomous vehicles,benefiting from shared resources like data and AI talent.See Agrawal,Gans,and Goldfarb,The Economics of Artificial Intelligence.31ARTIFICIAL INTELLIGENCE u MOONLooking ahead in the realm of AI policy,the establishment of international collaborative f

325、rameworks will become increasingly imperative.For such frameworks to materialize,however,it is essential for nations to align and share their guiding principles and values and respect disparities in policy priorities,legal systems,economic levels,societal norms,and geopolitical contexts of partner n

326、ations.By examining South Koreas AI policy and the state of its AI industry,this section seeks to explore the challenges and opportunities for robust collaboration between South Korea and the United States based on shared principles and values.The Ecosystem of South Koreas AI IndustrySouth Koreas ma

327、jor corporations have actively participated in the AI value chain,which encompasses data acquisition and processing,model development,and deployment.They have integrated AI primarily into well-established industries such as finance,healthcare,mobility,and entertainment,aiming to enhance their global

328、 competitiveness and generate added value.Recently,AI deployment has transitioned to the cloud,with the value chain extending into the domains of network infrastructure and semiconductor technologies,which are integral parts of the clouds ecosystem.In this extended value chain,South Korean companies

329、 in the semiconductor and telecommunications sectorsnotably Samsung Electronics and SK Hynixhave leveraged their unique technological expertise and financial resources to play significant roles in these backend industries.While South Korea holds a relatively low market share of 1%2%in the global AI

330、market,the domestic AI industry ecosystem has been consistently developing.5 South Koreas well-established conglomerates are proactively collaborating with promising startups by providing them with data and model infrastructure and jointly creating new services.Global tech giants like Apple,Google,a

331、nd Microsoft operate in South Korea and have employed acquisition-hire strategies or major investments in startups such as Siri,DeepMind,and OpenAI,subsequently launching services like Siri,AlphaGo,and Bing Chat.Naver,a South Korean online platform company,is equipped with an in-house research facil

332、ity known as Naver AI Lab.It acquired computer vision startup V.DO and integrated the companys technology into the content service Naver Webtoon.Furthermore,it strengthened its capabilities in natural language processing by acquiring CompanyAI and enhancing its language model engine CLOVA.While the

333、ICT sector has played a significant role in driving South Koreas economic growth,the competitiveness of the countrys AI industry remains relatively weak when compared with leading nations like the United States,where private sector innovation has been instrumental,and China,where the industry benefits from strong government support.Unlike major companies in these two giants,which participate acros