Executive Summary
This paper analyzes the economic and national security impacts of export controls, distinguishing between unilateral and multilateral approaches. It finds that multilateral controls are significantly more effective in reducing adversaries' military expenditure and enhancing U.S. security relative to adversaries, despite similar civilian economic costs. Unilateral controls, even an embargo, cannot achieve the same security outcomes due to trade diversion and reduced scale economies.
Why It Matters
This document provides a quantitative framework to assess the effectiveness of export controls, offering critical insights for policymakers on the strategic advantages of multilateral coordination over unilateral actions in national security.
Key Takeaways
- Multilateral export controls are significantly more effective than unilateral controls in reducing adversaries' military expenditure and improving U.S. relative security.
Source evidence · PDF page 2
Multilateral controls reduce adversaries’ real military expenditure by increasing their military price index. The security impact, measured as U.S. real military expenditure relative to adversaries, rises by about 1 log point under multilateral controls but only 0.14 log points under unilateral controls, with both imposing a similar civilian real cost.
- Unilateral U.S. export controls, even an embargo, cannot achieve the same security impact as multilateral regimes due to trade diversion and economic costs.
Source evidence · PDF page 54
Under the unilateral scenario the U.S. bears about the same civilian cost as under MECR24, but achieves only a third of the effect on aggregate adversary real military expenditure: 0.42 versus 1.29. From the U.S. perspective, the case for multilateral coordination is therefore clear: comparable economic cost but three times the effect on adversary real military expenditure.
- Multilateral coordination offers a comparable civilian economic cost to the U.S. but yields three times the impact on adversary real military expenditure compared to unilateral efforts.
Source evidence · PDF page 54
Acting alone, the U.S. reaches a maximum security impact of only about 0.14 lp; tightening further reduces U.S. exports and erodes its scale economies, reducing U.S. real military expenditure by more than that of its adversaries, so the curve bends back and additional civilian losses buy less security.
Strategic Relevance
The study quantifies the strategic trade-offs and effectiveness of export controls, highlighting the critical role of international coordination in achieving national security objectives and limiting adversaries' military capabilities. It provides an economic model for evaluating policy decisions related to trade restrictions and their geopolitical implications.