3

The New Competitive Landscape

The previous chapter reviewed the dramatic changes that have occurred in how technologies are developed and commercialized in today’s global environment. This chapter turns to the competitive landscape—in military, economic, and global ideological terms—that the United States is now facing, one that is vastly different from that of the past. Policies, processes, tools, and approaches developed in previous decades to enhance and protect the nation’s economic competitiveness and military security no longer reflect current circumstances and are increasingly counterproductive.

THE COMPETITIVE ENVIRONMENT IN THE 1950–1985 TIMEFRAME

The conditions existing after World War II gave rise to many of the structures and approaches still used today to protect national security. After emerging from the war with an intact industrial base and thriving economy, the United States was the world’s dominant economic power. In 1950, with just 5.9 percent of the world’s population, the United States accounted for 27 percent of the world’s gross domestic product (GDP), a figure that had grown to 40 percent by 1960. By 2020, the United States had 4.2 percent of the world’s population and produced about 25 percent of global GDP (Figure 3-1).

The United States also led the world in science and technology after World War II. Following the advice laid out by Vannevar Bush in his 1945 report Science, the Endless Frontier, the federal government rapidly increased its funding of research and development (R&D) in the 1950s (Bush, 1945). Federal R&D funding peaked at about 1.8 percent of GDP during the space race of the 1960s, decreased to just above 1 percent through the 1970s and first half of the 1980s, and then began a steady decline until the first decade of the 21st century (Figure 3-2). Meanwhile, starting in the late 1970s, private-sector R&D funding more than doubled as a percentage of GDP, and as a result, total U.S. R&D spending remained relatively stable at about 2.5 percent of GDP.

In the decades immediately after World War II, U.S. funding of R&D far outpaced that in other countries. In 1960, U.S. R&D funding accounted for nearly 70 percent of the global total (Scharre and Ainikki, 2020).

Support for science and technology from both the public and private sectors bolstered the nation’s military dominance while providing a steady stream of new ideas and technologies that companies could commercialize, often in large industrial R&D centers that produced some of the most groundbreaking advances of the 20th century. Examples of technologies derived in part from defense and nondefense federally funded R&D include digital computing, nuclear power, jet aircraft, microelectronics, spaceflight, and the internet. The U.S. science and technology enterprise was committed to excellence, risk taking, talent acquisition from both domestic and international sources, and broad global engagement in research collaboration. Although patent eligibility and quality vary across countries, U.S. technological leadership for much of the past century was reflected in the number of patents filed with the U.S. Patent and Trademark Office (USPTO) (see Figure 3-3) and the number of scientific publications with at least one U.S. author.

Accompanying the growth in federal R&D funding in the 1950s and early 1960s, support for higher education through such mechanisms as the Servicemen’s Readjustment Act of 1944 (the “G.I. Bill”) and an increase in the number of jobs requiring postsecondary education led to a rapid expansion of higher education in the United States. Enrollment in colleges and universities rose

from less than 2.5 million in 1950 (representing 10 percent of the U.S. population of 15- to 24-year-olds) to more than 8.5 million by 1970 (23 percent of 15- to 24-year-olds), and to almost 14 million by 1990 (37 percent of 15- to 24-year-olds) (Snyder, 1993). Although the number of 2- and 4-year colleges and universities in the United States roughly doubled over these four decades, these increased enrollments were accommodated to a greater extent by an expansion of existing institutions. Many institutions also strengthened their programs in STEM (science, technology, engineering, and mathematics) to meet the needs of their burgeoning student populations and of the workplace.

The dominance of the United States and its allies in the development and commercialization of new technologies gave the nation numerous “first-mover” advantages over other competitors. U.S.-based companies were often the first to develop new technologies and deploy them in the market, and in so doing were able to shape market conditions. As a result, the United States enjoyed advantages in developing the standards that defined new technologies (especially platforms), in shaping the user base for those technologies, and in defining the regulatory frameworks to support them. Being the first to specify new applications of these technologies enabled the United States to identify new markets that attracted investment and talent, defined supplier relationships, and shaped trade relationships. Even when the production of more mature technologies moved to overseas locations, the United States was generally able to respond by developing the next new technology area, where it would again enjoy these first-mover advantages.

Economic growth driven by public- and private-sector investments in R&D, a world-class university-based educational and research system that attracted talent from around the world, and an innovation environment that both celebrated and rewarded risk taking established the United States as the world’s leading economic superpower in the 1950–1985 period. Ownership of intellectual property and the broad availability of U.S.-based investment capital contributed to successive “new economies”—consumer electronics, air flight, digital information technologies, health care, and so on—that defined the postwar era. By the 1970s, a vibrant research and innovation ecosystem, world-class universities serving a broad population, a strong national laboratory system, substantial and consistent government research budgets, highly visible leadership on the world’s scientific and standards stages, and an aura of energy and invincibility combined to make the United States a mecca for international students. Just as Europe was once a top destination for U.S. graduate students and postdoctoral fellows, the United States became a leading destination for talented students, many of whom entered the U.S. workforce after graduation.

THE COLD WAR NATIONAL SECURITY COMPETITION

The decades from 1950 to 1990 were also characterized by a bipolar military competition that pitted the United States and its allies against the Soviet Union and its allies. Military competitiveness was maintained through national

investments in scientific research, technology development, weapons, and personnel. Individual technologies, such as nuclear weapons, stealth aircraft, cruise missiles and precision-guidance munitions, were a major basis of competition, creating the so-called offset paradigm of national defense in which science and technology leadership and industrial might more than compensated for the numerical personnel advantages of adversaries. Military technologies were pursued through large-scale acquisition processes, and the private-sector technology connection to defense was through the defense industrial base. And while many factors ultimately contributed to the collapse of the Soviet Union and the ultimate “winning” of the Cold War by the United States, U.S. primacy in science, technology, and innovation was decisive. A primary argument of this report is that while today’s competitive environment is substantially different from that during the Cold War, leadership in science and technology remains the most important capability for the nation to leverage.

In the competitive environment of the Cold War, the United States could outinnovate and outspend its competitors to maintain its scientific, technological, commercial, and military advantages. During this “rising tide lifts all boats” era, the United States could remain well ahead of other countries while being open and allowing others (especially U.S. allies) to obtain the products of its R&D enterprise. This stance also enabled the United States to take maximum advantage of global talent and expertise. The technologies that drove military competitiveness were relatively distinct from those that drove commercial products and markets, and their dissemination could be clearly and vigorously controlled without substantially slowing the development of commercial technologies. The strong separation between military and commercial technologies also meant that foreign researchers could be provided with abundant opportunities to learn, create, and develop technologies in the United States and then stay to contribute their expertise, innovation, and energy to U.S. economic growth without raising national security concerns.

Over time, many scientists and engineers from other countries became U.S. citizens and moved into corporate and academic leadership roles, thus bringing greater diversity to U.S. institutions. U.S. researchers and research institutions also collaborated with researchers in other countries and encouraged foreign researchers to use U.S. facilities.

THE RESULTING POLICY LANDSCAPE¹

During the Cold War, protecting the many U.S. advantages associated with technology leadership essentially was distilled down to a range of policies aimed at protecting specific “critical technologies” from unauthorized disclosure, production, or use by adversaries. During this period, the risks associated with

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¹ This section is based in part on a presentation to the committee on August 10, 2021, by Gerald L. Epstein, distinguished research fellow at the Center for the Study of Weapons of Mass Destruction, National Defense University.

these discrete technologies, typically with single or limited uses that were clearly related to national or economic security, could be managed through the application of controls or restrictions on their development, manufacturing, use, acquisition, or trade.

However, it was the assumption that the United States enjoyed overwhelming advantages as a first-mover technology innovator that justified this policy approach based solely on the restriction of specific outputs of that enterprise. Furthermore, the R&D advantages of the United States over its adversaries enabled it to tolerate any potential downstream risks associated with these restrictions because they were unlikely to have a negative effect on the nation’s leadership position.² It then follows that if U.S. dominance in the development of new technologies can no longer be assumed, this policy approach may not adequately protect U.S. interests.

National Security Decision Directive 189

National Security Decision Directive 189 (NSDD-189), entitled “National Policy on the Transfer of Scientific, Technical and Engineering Information” and issued on September 21, 1985, was a central policy-defining document governing federal R&D restrictions during the Cold War (White House, 1985). Reaffirmed by President George W. Bush, NSDD-189 reflects the philosophy underlying how the Unites States views the value, role, and performance of fundamental research and the balance between the risks of openness and restriction. The directive establishes that “the free exchange of ideas” is “vital” to the strength of American science. It defines “fundamental research” as “basic and applied research in science and engineering, the results of which ordinarily are published and shared broadly within the scientific community, as distinguished from proprietary research and from industrial development, design, production, and product utilization, the results of which ordinarily are restricted for proprietary or national security reasons.” It then states:

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² A secondary assumption was that the United States had sufficient leverage to convince other potential countries with militarily sensitive technology to undertake similar controls on exports to potential adversaries and not to allow third-party transshipment (see, e.g., Gompert and Kugler, 1996).

At its core, NSDD-189 addresses many of the issues the committee has been asked to review. It recognizes the profound value of fundamental research and observes that such research provides the best value to society if its results are communicated broadly, rapidly, and without encumbrance. It further recognizes that some areas of research are vital to the U.S. national security and that such areas need to be protected through simple and limited mechanisms. As the Center for Strategic and International Studies has stated, “This Directive does not assert that the open dissemination of unclassified research is without risk. Rather, it says that openness in research is so important to our own security—and to other key national objectives—that it warrants the risk that our adversaries may benefit from scientific openness as well” (Commission on Scientific Communication and National Security, 2005).

At the same time, it should be recognized that NSDD-189 reflects the era of U.S. dominance in science and technology during which it was issued. It is focused on restrictions on the products or results of research rather than the research process itself and on restrictions on the production, sale, trade, or use of technologies. It is informed by risk acceptance position that the costs of losing some information of commercial or national security importance to other countries are outweighed by the benefits of openness. The policy simply does not envision the potential need to protect the U.S. position as the leader in R&D and the development of new technologies or the underlying conditions that are responsible for the nation’s leadership. As a result, the directive does not address the need to protect access to top talent or to preserve open environments that foster disruptive discoveries. While NSDD-189 remains an important statement of principle for U.S. policy, then, its sole focus on protection of the information and technology outputs of the R&D process through such restrictions as classification limits its usefulness in a more competitive global environment. The following subsections briefly review some of the most common restrictions used to manage technology- or research-related risks.

Classification

Consistent with the priority accorded open fundamental research by NSDD-189, the United States maintained a relatively simple formal mechanism for classifying research results. Almost all security classifications are assigned under an executive order rather than under statute. With rare exceptions, information can be classified only if it is owned by, is produced by or for, or is under the control of the U.S. government, a provision that greatly restricts the

government’s ability to classify information in, for example, an individual researcher’s publications.³

Under an executive order issued during the Obama administration, information regarding “scientific, technological, or economic matters relating to national security” may be classified, but “basic scientific research information not clearly related to national security shall not be classified.”⁴ Classification of information on national security grounds prohibits its access by anyone without a government-issued security clearance and a demonstrated “need to know.”

Federal Contracts and Grants

The terms and conditions of federal grants constitute another mechanism by which the government can place controls on research. Provisions in grants and contracts may designate results as requiring protection, restrict publication, provide for advance government review, or require approval of individuals performing the research. Although terms and conditions vary by federal agency, for example, grants and contracts typically encourage principal investigators working on unclassified projects who are concerned that their research results may be classifiable to bring those concerns promptly to the attention of the funding agency. However, researchers are not always aware of these requirements or in the best position to identify the potential uses of their research that would warrant classification.

The terms and conditions of federal funding typically require disclosure of foreign financial conflicts of interest and commitments and of any foreign affiliation. As discussed below, the White House has provided guidance designed to clarify the implementation requirements of a National Security Presidential Memorandum issued in early 2021.

Controlled Unclassified Information

Some 70 statutes provide for control of unclassified information for which some level of protection from unauthorized access is deemed necessary. In the past, this information was labeled in a variety of ways, such as “sensitive but unclassified” or “for official use only,” and federal agencies developed their own procedures for protecting such information.

In 2008, the Bush administration issued a memorandum entitled “Designation and Sharing of Controlled Unclassified Information (CUI),” aimed at standardizing the terms and practices used by departments and agencies in designating research results as requiring some form of protection. Nonetheless,

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³ A major exception is research related to the development of nuclear weapons. According to the Atomic Energy Act of 1946, “The term ‘restricted data’ means all data concerning (1) design, manufacture, or utilization of atomic weapons” (Pub. Law 83-703, Section 11.y).

⁴ The text of the executive order is available at https://www.archives.gov/isoo/policy-documents/cnsieo.html.

policies and practices still differ across departments and agencies and even differ from program manager to program manager, as described later in this chapter.

Export Controls

Another mechanism by which the government can control knowledge or information relevant to innovation involves export controls. The 1949 Export Control Act gave the U.S. government the legal authority to restrict exports to Soviet bloc countries, and an international committee, the Coordinating Committee for Multilateral Export Controls, established by the Western bloc in 1950, developed lists of strategic technologies and materials subject to controls.⁵ Under the export control system, licenses are required to export certain items to certain destinations, with the requirements depending on both the item and the destination. Exports of nonpublic technical data associated with listed items can also be controlled.

Transfers of controlled information to a foreign national within the United States are also deemed to be exports. Such transfers can require a license even though the information never crosses national boundaries. Employers must have a license to share controlled information with foreign nationals in their employ.

Publication of fundamental research⁶ is generally exempt from export controls. Thus, the publication of fundamental research information is generally not considered a licensable act within the export control system. Voluntary government security review, or mandatory review of government-funded research, does not change the export control status of fundamental research. However, material redacted from publication may become subject to export controls.

Controls on Foreign Investment

The President has the authority to block investments by foreign entities in U.S. companies or real estate when those investments might impair national security—for example, by offering foreign access to or control of technologies, data, or other capabilities important to military or other national security systems. Such investments are reviewed and approved by the Committee on Foreign Investment in the United States (CFIUS), which was created in 1975 in response

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⁵ The Coordinating Committee for Multilateral Export Controls was later largely succeeded in the 1990s by the Wassenaar Arrangement; 42 nations now participate in these voluntary export controls of conventional weapons and dual-use goods and technologies. See https://www.wassenaar.org/aboutus/#faq (accessed August 30, 2022).

⁶ “Fundamental research” is defined as basic and applied research in science and engineering, the results of which ordinarily are published and shared broadly within the scientific community, as distinguished from proprietary research and from industrial development, design, production, and product utilization, the results of which ordinarily are restricted for proprietary or national security reasons (see NSDD-189 [White House, 1985]).

to concerns about investments in the United States by Middle Eastern countries. Because the nation has an interest in encouraging foreign investment, CFIUS may seek some sort of mitigation that would enable a sale to occur, such as spinning off a U.S. division or establishing a control authority mechanism. Recent changes to CFIUS are discussed later in this chapter.

Other Restrictions

Other restrictions also exist. In the life sciences, policies on “dual-use research of concern” establish mechanisms for identifying security risks that the research may pose and considering mitigation approaches.⁷ These mechanisms are required as a term and condition of U.S. funding and do not directly affect privately funded activities not conducted at federally funded institutions. However, many private entities have established processes that parallel those of the government.

A wide range of policies in areas unrelated to security—such as safety, ethics, use of animals, use of human subjects, and environmental protection—can constrain research and international collaboration and affect innovation. Such policies serve social objectives that may be judged more important than any competitive disadvantage they may produce.

Standards, Trade, and Other Controls

Technical standards representing agreement on shared properties or features of technologies or the processes that produce them play a major role in shaping which technology features will be acceptable in the market (because they conform to the standards). Therefore, standards play a significant role in defining a technology, particularly any widely shared system technology or platform. Most standards are developed by standards-setting organizations, which may be international, governmental, or private sector. The position of the United States has been that federal use of standards—for example, for regulation or procurements—should be based on a voluntary consensus standards-setting process and that the government should participate in that process (OMB, 1998). This bias toward using industry-developed standards was shaped by the dominant role of U.S. technology companies in shaping the technology landscape. This “hands-off” approach is starkly different from the approach of some of the United States’ national competitors, for which standards setting and recognition are government functions.

As a control, standards play an indirect role. By defining “preferred” technologies as those conforming to standards (for example, a standard data format or communication protocol), they can affect market access by other technologies or distort competition unless they are accessible to all. Similarly,

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⁷ For the National Institutes of Health, these mechanisms are described at https://oir.nih.gov/sourcebook/ethical-conduct/special-research-considerations/dual-use-research.

some countries require disclosure (for example, of source code or of other proprietary details) of technologies incorporated by a standard. Standards also play a key role as a basis for regulation or trade, and in this way can create (or eliminate) regulatory barriers, or technical barriers to trade.

TODAY’S COMPETITIVE LANDSCAPE

Since the end of the Cold War, and at an accelerating pace since the beginning of the 21st century, the U.S. science, technology, and economic landscape has changed dramatically. Major competitive shifts have occurred in the global nature of science and technology and in the commitments and capabilities of global allies, partners, and adversaries. These fundamental changes necessitate a reexamination of the foundational bases for and the processes used to evaluate how best to protect and enable national security and economic competitiveness.

This section focuses primarily on the research and technology elements of the changing competitive landscape. Numerous other tools, processes, and mechanisms also are used to build, enhance, and sustain a nation’s economic and national security competitive position. Two used effectively by the United States—participation and leadership in setting international standards, and CFIUS—are described in the previous section. Several others are briefly noted here, including international agreements in trade, research, intellectual property protection, and security (e.g., weapons nonproliferation); a welcoming immigration system for top global talent; and tax and investment structures that effectively lubricate the movement of technologies to business value.

Global competition in science and technology grew as other countries witnessed the success of the United States in science, technology, and engineering and the profound importance of its higher education research institutions in enabling that success. In response, many adopted elements of this “American model” and began investing more in R&D (see Figure 3-4). According to one recent estimate, Chinese investments in R&D will surpass those of the United States by 2025 (Chik, 2021). From a high of 69 percent of the R&D performed worldwide in 1960, U.S. R&D spending fell to 30 percent of the global total in 2019 (Sargent, 2021).

Increases in R&D funding have helped spur increases in the number of patents granted and the amount of venture capital (VC) invested. As shown in Figure 3-5, global VC investment skyrocketed in 2021 amid the COVID-19 pandemic. However, the U.S. share of global VC deal value has remained below 50 percent since 2015. The reason is that, although the United States still leads all other countries in VC investments (see Figure 3-6 for 2021 breakdown), VC investment in China and India has been growing rapidly.

Other countries have also greatly increased the size of their tertiary education systems and the number of students graduating with undergraduate and

graduate degrees in STEM fields. In 2018, approximately 2.3 million students in India and 1.8 million in China graduated with first university degrees in science and engineering, compared with about 810,000 in the United States (NSB, 2022b). China and the United States now award about the same number of doctoral degrees in science and engineering, and many of those degrees in the United States go to international students on temporary visas (as discussed below and in the next chapter). By supporting domestic programs in STEM education, foreign governments are pursuing sustained, systematic strategies for reducing U.S. advantages in innovation and production.

One result of this emphasis on R&D and STEM education by other countries is that scientific research and technology development have become much more internationally integrated. Academic researchers collaborate and access sponsors globally, communication is instantaneous because of new digital communication technologies, and collaborators no longer must meet in person. As one measure of this globalization of research, the percentage of worldwide science and engineering articles produced with authors from research institutions in at least two countries rose from 18 percent to 23 percent between 2010 and 2020. Among articles with a U.S. author, about 40 percent have authors from multiple countries (NSB, 2019).

Another measure of the globalization of science and technology is the number of international students who come to U.S. colleges and universities, often to study in STEM fields. The share of foreign-born graduate students and postdocs enrolled in U.S. universities has risen substantially since 1980, although that share recently dropped, likely as a result of COVID-19 (Figure 3-7) (Channa, 2021). Students on temporary visas earned about 36 percent of the master’s degrees in science and engineering awarded in 2019, including 50 percent of those in engineering and 75 percent of those in computer sciences (NSB, 2022a). Students on temporary visas earned about one-third of doctoral degrees in science and engineering in 2019, which was about the same proportion as in 2011. In 2019, temporary visa holders earned more than half of U.S. doctoral degrees in economics, computer sciences, engineering, and mathematics and statistics. After graduation, many recipients of bachelor’s, master’s, and doctoral degrees do remain in the United States to work, contributing substantially to the nation’s science and technology enterprise and entrepreneurial vigor. Additionally, foreign scientists and engineers are more likely than their native counterparts to start new high-tech and high-growth companies (see, e.g., Azoulay et al., 2022; Kahn et al., 2017), although recent evidence suggests that U.S. immigration policies may be inhibiting the ability of foreign students to found new companies or work in startups (Roach and Skrentny, 2019; Roach et al., 2019).

Federal policies imposing restrictions on international students may be one reason for the plateauing of international graduate students studying in U.S. institutions. Another may be that other countries have instituted or expanded programs to retain talented students in science and engineering and attract graduates of U.S. universities back to their home countries. The United States is no longer the only aspirant or destination for global talent. Immigration systems in other English-speaking countries, such as the United Kingdom, Australia, and Canada, are more flexible and more focused on skills-based needs compared with the U.S. immigration system (NASEM, 2015). High-skilled immigration is growing more rapidly in other Organisation for Economic Co-operation and Development (OECD) countries than in the United States, and the U.S. share of international students has been declining (NASEM, 2015).⁸ Other countries have launched initiatives to recruit talent, including students who have been trained in the United States. While recent U.S. immigration reforms have allowed foreign students to work longer (through optional practical training) after completing their degrees, the number of temporary work visas is capped, even for those occupations in which workers are in high demand.

Reflecting trends in higher education, technology-based companies have become more international since the 1980s, in part because of the globalization of science and technology, the development of digital communications, and the

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⁸ Rising costs of U.S. higher education, visa delays and denials, and expanded opportunities in other countries are some of the reasons listed for the decline in attractiveness for international students (Israel and Batalova, 2021).

establishment of global supply chains. These companies do research globally, seek to tap into local innovation systems and the products of research universities, and compete in multiple countries simultaneously. This globalization of industry has occurred even as private-sector R&D in the United States as a percentage of GDP has increased and federal R&D has declined. As a result, other countries have much greater access to the results of the R&D done by U.S.-based companies than they did in the past.

THE EXPANSION OF CONTROL MECHANISMS

In response to growing competitive pressures from other countries, and in light of the U.S. policy framework emphasizing the role of restrictions on the outputs of the nation’s technology enterprise, the U.S. research community has seen a steady increase in the number and complexity of restrictions governing the conduct of scientific and technology R&D. The simultaneous expansion of the number and scope of “critical technologies” raises important questions about whether restrictions alone are addressing challenges to U.S. technology leadership or if they are having increasing adverse consequences, since the United States is no longer dominant compared with its competitors.

Restrictions on Research Environments

Despite the uniform designation of information deemed to require protection as “controlled unclassified information” (CUI), the practices used by

departments, agencies, and program managers continue to vary and consume large amounts of researchers’ time. Researchers also are concerned about the imposition of controls in formerly uncontrolled environments.

Increasingly Complex Classification

Program managers at federal agencies often place clauses in research contracts designed to ensure that work that might require protection is properly identified prior to publication and to restrict the participation of foreign nationals in such programs. Such restrictions are clearly at odds with the intent of NSDD189 to allow the free exchange of ideas. By limiting the exchange of ideas, participation by others, and international collaboration, such restrictions can slow the pace of research and make research environments less attractive to talented people. Unfortunately, the need to take precautions creates incentives for federal managers to impose restrictions but not for them to designate clearly work that can be done in unrestricted environments. It also has a chilling effect on researchers, who may be disinclined to work in certain areas or to speak on particular topics.

Increases in Security Requirements

The designation of information as CUI can have important implications for the conduct of research. To cite just one example, the federal government can handle CUI on information systems only if certain security measures are in place, and it can require nonfederal parties handling CUI to adhere to the same limitation. Many universities lack robust cybersecurity systems that meet these standards. Thus, requiring them to meet the standards for CUI can impose a considerable constraint on their research.

Restrictions on Foreign Collaborations

Congress and the Trump administration have taken several steps aimed at tightening security within the research enterprise (Goodrich, 2020a). For example, the Trump administration issued a proclamation limiting the entry of foreign researchers into the United States, imposing further restrictions in response to the COVID-19 pandemic (President of the United States, 2020). It specifically targeted Chinese graduate and postgraduate students and researchers with any ties to the Chinese government’s “military–civil fusion strategy” (described in the next chapter).

Restrictions on Who Can Participate in Research

The above and other policy initiatives have placed a significant burden on U.S. research institutions and researchers. Complying with heightened rules and regulations reduces research productivity, with uncertain security benefits.

Focusing attention specifically on students and researchers from China has created mistrust and disruption that have further slowed research projects. Singling out researchers from particular countries has the effect of encouraging them to take their skills elsewhere. Given the globalization of science and technology, researchers may be able to do essentially the same work in those other countries, resulting in a net loss to the United States.

Increased Reporting Obligations

Funding agencies have increasingly placed more complete and detailed disclosure requirements on researchers, including reporting of all sources of support, conflicts of interest, and conflicts of commitment, and systematized those requirements across government.

In January 2022, a subcommittee of the Joint Committee on the Research Environment under the National Science and Technology Council released its “Guidance for Implementing National Security Presidential Memorandum 33 (NSPM-33) on National Security Strategy for United States Government-Supported Research and Development” (NSTC, 2022). The guidance was based on three principles: to protect America’s security and openness, to be clear so that well-intentioned researchers can easily and properly comply, and to ensure that policies do not fuel xenophobia or prejudice. The guidance provides direction on five major areas of research security: disclosure requirements and standardization, the use of digital persistent identifiers, consequences for violations of disclosure requirements, sharing of information about research security, and research security programs at federally funded institutions. The guidance authorizes a requirement for federal agencies to implement NSPM-33 in a nondiscriminatory manner, including among members of ethnic or racial minority groups. It also notes that “agencies should incorporate measures that are risk-based, in the sense that they provide meaningful contributions to addressing identified risks to research security and integrity and offer tangible benefit that justifies any accompaning cost or burden” (NSTC, 2022, p. 1). The Office of Science and Technology Policy is expected to release standardized requirements for establishing research security later in 2022.⁹

Export Control Expansion and Designation of Essential Technologies

The Export Control Reform Act of 2018 called for the Commerce Department to establish export controls on “emerging and foundational technologies that are essential to the national security of the United States” (Fergusson et al., 2021). In establishing these controls, the Commerce Department was directed to consider the foreign availability of technologies, the effects on

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⁹ Letter from Alondra Nelson dated March 1, 2022, to Heads of Member Agencies of the National Science and Technology Council; https://www.whitehouse.gov/wp-content/uploads/2022/03/032022-Coordination_RS_Letter.pdf (accessed June 12, 2022).

development of these technologies in the United States, and the effectiveness of limiting the proliferation of these technologies. Although the legislation does not define the term “foundational,” it is generally held to encompass security-relevant or economically relevant technologies on which future technology development depends.

In November 2018, the Commerce Department listed 14 categories of emerging technology as essential for national security and sought comment on this list:

• biotechnology;
• artificial intelligence and machine learning;
• position, navigation, and timing;
• microprocessors;
• advanced computing;
• data analytics technology;
• quantum information and sensing;
• logistics;
• additive manufacturing;
• robotics;
• brain–computer interfaces;
• hypersonics;
• advanced materials; and
• advanced surveillance technologies.

Many of those submitting comments urged caution, arguing that constraining the ability to develop such technologies and sell them could end up harming rather than benefiting the United States. Two years later, the Commerce Department sought public comment on the definition of and criteria for foundational technologies without offering specific candidates for comment. Many respondents similarly urged caution and pointed to the potential costs of controls on such technologies.

In February 2022, the Fast Track Action Subcommittee on Critical and Emerging Technologies of the National Science and Technology Council released a “Critical and Emerging Technologies List Update,” which identifies critical and emerging technologies (CETs) as a “subset of advanced technologies that are potentially significant to U.S. national security” (Fergusson et al., 2021). Citing the 2021 Interim National Security Strategic Guidance, it defines three national security objectives: protecting the security of the American people, expanding economic prosperity and opportunity, and realizing and defending democratic values. The technologies it identifies are:

• advanced computing,
• advanced engineering materials,
• advanced gas turbine engine technologies,

• advanced manufacturing,
• advanced and networked sensing and signature management,
• advanced nuclear energy technologies,
• artificial intelligence,
• autonomous systems and robotics,
• biotechnologies,
• communication and networking technologies,
• directed energy,
• financial technologies,
• human–machine interfaces,
• hypersonics,
• networked sensors and sensing,
• quantum information technologies,
• renewable energy generation and storage,
• semiconductors and microelectronics, and
• space technologies and systems.

In each of these areas, it further identifies “key subfields.” For artificial intelligence, for example, these subfields are

• machine learning;
• deep learning;
• reinforcement learning;
• sensory perception and recognition;
• next-generation artificial intelligence;
• planning, reasoning, and decision making; and
• safe and/or secure artificial intelligence.

The report states that “departments and agencies may consult this CET list when developing, for example, initiatives to research and develop technologies that support national security missions, compete for international talent, and protect sensitive technology from misappropriation and misuse.” Given the very broad reach of the items on this list, its widespread application is likely to heighten controls on research. And despite the fundamental research exclusion on export controls, previous National Academies reports have noted that the current regime is unnecessarily burdensome and counterproductive to national security objectives, and has impeded university research in a wide variety of areas (NRC, 2007 and NASEM, 2016).

Controls on Foreign Investment

The Foreign Investment Risk Review Modernization Act of 2018 extended CFIUS’s authority to review transactions beyond those conferring

foreign ownership to include investments that might provide access to nonpublic technical information or data relevant to national security. These changes have directed the attention of CFIUS to “critical technologies,” “critical infrastructure,” and foreign investments perceived as harmful to national security (Jackson, 2020).

This expansion of the CFIUS review authority has required agencies to assign more staff to the review process to understand the technologies under consideration, potential risks, and possible mitigation measures. In general, the legislation marks an expansion of oversight beyond individual investment decisions to combinations of transactions and their effects on the U.S. economy and national security. It also raises significant questions as to whether CFIUS or CFIUS-like processes can operate on the timescales necessary to ensure that research collaborations can keep pace with the speed of new science and technology exploration and innovation. This issue is particularly acute at university laboratories, where the annual calendar associated with new graduates, postdoctoral researchers, and faculty would be seriously impacted by approval processes that span months or years.

IMPLICATIONS OF THE NEW COMPETITIVE LANDSCAPE FOR U.S. POLICIES AND PROCEDURES

U.S. policies, programs, and procedures designed to protect U.S. technology advantages have been proving less effective as the nation’s competitive leadership in related areas of science and technology has narrowed. Protective laws, policies, and programs are often inconsistent; existing programs and agency approaches are often uncoordinated; and public–private coordination is weak. Furthermore, as discussed in Chapter 4, the United States now has a near-peer competitor—China—that has demonstrated its ability and willingness to devote substantial resources, both money and people, to enhancing its global position. In addition, China has a different social and governmental system and different ideological and cultural baselines, which together pose unprecedented challenges to U.S. competitiveness.

The United States still needs to protect a subset of technologies whose loss could result in a decline in national or economic security. But efforts to control particular “critical technologies” no longer constitute a sufficient strategy. Countries around the world have enhanced their own R&D capacity and are now active contributors to the development of many civilian and military technologies. The United States can no longer make decisions from a position of sole economic or military superiority. The nation’s competitors have most of the tools available in the United States, and China and India have domestic human resources that surpass those of the United States. Global supply chains deliver technologies and materials vital for both national security and economic competitiveness; for example, the Department of Defense is dependent upon China and other countries for very large cast and forged parts, which are used in weapon systems and ground combat vehicles, among other defense applications (DoD, 2022). The United States also has major noncooperating adversaries that control key natural

resources—for example, Russian natural gas, Middle Eastern petroleum, or Chinese rare earth minerals—allowing them to exert power beyond their economic or military standing.

In this context, the United States must now make a much broader effort to protect vital U.S. advantages in all aspects of technology development, commercialization, production, and use. The current policy landscape appears to be mismatched to the dual threats to U.S. interests of a more complex technology landscape and growing international competition in broad areas of research, development, and commercialization. Expanded efforts to protect or control a growing list of technology areas through restrictions on research, including areas of fundamental research and discovery, are not addressing ongoing concerns about these threats to U.S. technology leadership (President of the United States, 2020); instead, they may be adversely impacting U.S. leadership in science and research. Heightened rhetoric about the risks posed by immigrants or foreign-born researchers is motivating a number of restrictions and controls, including growing numbers of counterintelligence cases involving U.S. researchers, new restrictions on conflict management and disclosure, and limitations on visas on foreign-born students and researchers (Goodrich, 2020b). If the restrictions and controls instituted to address such concerns constitute the sole approach to technology protection and are applied to a broad range of research activities, the unintended consequence may be to erode the first-mover advantage in the discovery and development of the latest technologies enjoyed historically by the United States.

New circumstances require a new approach to technology protection. Focusing solely on limiting participation and controlling the outputs of the U.S. innovation system will not address the threats posed by competition in other areas. Current protection mechanisms can block the public- and private-sector innovation pipelines that drive economic competitiveness. Overly strict protections also constrain the access to talent from around the world that has been a pivotal factor in the nation’s rise to global prominence. In today’s world, a strong offense, not just a strong defense, has become the crucial determinant of success. While the battlefield has changed since the Cold War, leadership in science, technology, and innovation remains the most important weapon in the current competitive environment.

The potent combination of increased competition in research and innovation and the global interdependence of technology has made the current U.S. approach to protecting technology outdated. Openness and trust foster innovation leadership; the challenge in a world of interdependence and competition is to maximize openness and trust in a risk-conscious fashion. As important as the protection of certain specific technologies is, today’s landscape requires a strong focus on protecting the advantages of the U.S. innovation system—those that help bring the fruits of the U.S. research and innovation ecosystem to market, with benefits for U.S. economic and security leadership.

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