Introduction: Fostering U.S.-ROK Cooperation on Emerging Technologies and Data

Introduction

The world is witnessing unprecedented sea changes brought about 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] The competitive dynamics in AI development between the United States and the People’s 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.[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.[3]

U.S. Export Controls on Critical and Emerging Technologies

In 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, Washington 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 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 research, 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 reform. 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 chain and indirectly altering export dynamics.

On October 7, 2022, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) issued new export controls to limit China’s military advancements by restricting access to advanced AI chips produced with U.S. technology.[6] These measures are part of ongoing efforts to safeguard U.S. national security and foreign policy interests. The updates specifically aim to hinder China’s 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 original rules. The revision included changes to the 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 NAND memory development or production.[7]

These 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 in the Republic of Korea (ROK), like Samsung Electronics and SK Hynix, which are crucial to the country’s 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 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 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 AI

The United States wants to be a global leader in AI development. 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 also 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, the 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 people’s privacy and civil rights by ensuring that AI development is more transparent 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 and use of AI.[11] It sets new standards 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-preserving 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 competitiveness, with an emphasis on the federal government’s 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 leaders 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 summit’s Bletchley Declaration emphasizes the critical need for collaboration across governments, businesses, 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 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 importance of building public trust in AI.[12]

Data Governance Challenges

Data 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, ownership, 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, 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 Obama’s executive order “Making Open and 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 accessible 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 using government data. On June 9, 2021, President Biden issued the executive 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 entities. The executive order directs the implementation of measures to counter these data privacy risks while maintaining an evidence-based, criteria-driven approach.

Although the ROK’s data governance regime is considered one of the most mature and advanced in the world,[15] legislation proposed in South 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 companies to navigate the patchwork of regulations and ensure adequate data protection for users.[16]

U.S.-ROK Cooperation on Critical and Emerging Technologies and Data

The tremendous opportunities and daunting challenges presented by AI development, the profound impact of advanced semiconductors on national 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 international 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 Yeol’s commitment, following the 2021 announcement of the K-Semiconductor Belt strategy, to make South Korea a top semiconductor powerhouse by 2030. In February 2022, the Biden administration’s new Indo-Pacific Strategy highlighted the need to “work with partners to advance common approaches to critical and emerging technologies.”[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 between 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 privacy framework.[19] Its main points include fostering international cooperation to facilitate cross-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 effective protection and enforcement of privacy rules globally. With the Yoon administration’s ambition to develop the world’s 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 data policy, find mutually acceptable bilateral solutions, and shape regional and global digital norms to align with their shared interests.

Organization of the Report

Against the backdrop of the increasing global competition over AI and semiconductors and the compelling need for streamlining cross-border 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 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 chapter 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 Solís discusses the escalating U.S.-China tech rivalry, 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 acknowledges 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 impact of U.S. semiconductor export controls on the global industry, with a focus on South Korea. The U.S. restrictions aiming to limit China’s access to advanced technology significantly affect South Korean firms due to their extensive operations in China. These measures have created operational uncertainties and challenges for South Korea’s 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 industry 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 computing 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 Korea’s AI ecosystem, reviewing its policy landscape and exploring challenges and opportunities for U.S.-ROK collaboration on responsible AI development. In the second part of the chapter, Cole McFaul highlights the escalating role of AI in global security and economic sectors, emphasizing U.S. and South Korean efforts to govern AI development responsibly. He recognizes the broad impact of 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 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 challenge 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 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 Korea’s Personal Information Protection Act and its 2023 amendments, which expanded the legal bases for international personal data 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 highlights South Korea’s 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 leadership in AI, semiconductors, and data governance and offers insights and policy options to foster collaboration going forward.

Gwanhoo Lee is a Professor in the Kogod School of Business at American University.

Endnotes

[1] Henry 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 World’s Most Critical Technology (New York: 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 Act’s Investments in Clean Energy and Climate Action, version 2 (Washington, 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 People’s Republic of China (PRC),” U.S. Department of Commerce, Bureau of Industry and 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.

[7] “Commerce Strengthens Restrictions 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-acs-and-sme-rules-final-js/file.

[8] Kim Hoe-seung et al., “Korea’s 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 Administration’s Commitment to 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-secure-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.

[11] White House, “Executive Order on the Safe, Secure, 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 Attending the AI Safety Summit, 1–2 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 Order—Making Open and Machine Readable 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-.

[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-adversaries.

[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): 143–66.

[16] Paul Pittman, Kyle Levenberg, and Shira Shamir, “Data Protection Laws and Regulations USA 2022,” Global Legal Group, August 7, 2022, https://iclg.com/practice-areas/data-protection-laws-and-regulations/usa.

[17] 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 States–Republic of Korea Leaders’ Joint Statement,” White House, May 21, 2022. https://www.whitehouse.gov/briefing-room/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://www.commerce.gov/global-cross-border-privacy-rules-declaration.