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The history and limits of America’s favourite new economic weapon
America has ramped up controls on technology trade with China
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America had found a new way to crimp adversaries which it perceived as a national-security threat.
PHOTO: AFP
The Economist
At 11:15am on Oct 7, an American official published 139 pages of regulations on a website called the Federal Register. Across East Asia, from Taipei to Nanjing, semiconductor executives panicked. The American government was claiming jurisdiction over every line of code or machine part that had ever passed through the United States, and over the activities of every American citizen, everywhere on the planet. Companies using American code, equipment, or people to make advanced computer chips bound for China had to stop, on pain of being cut off themselves.
It was a salvo from America’s favourite new economic weapon, the Foreign Direct Product Rule (FDPR). Whereas some sanctions weaponise the ubiquity of the dollar to inflict harm by preventing targets from using it, the FDPR attempts to weaponise the ubiquity of American technology. It lets the government claim jurisdiction over almost every chip factory in the world, because almost every one contains hard-to-replace American tools. TSMC, a Taiwanese chipmaker, stopped selling advanced chips to Chinese customers immediately.
